This document provides an overview of classical and neo-classical management theories. It discusses key theories such as Scientific Management, Bureaucratic Theory, Administrative Management Theory, Hawthorne Experiments, Maslow's Hierarchy of Needs, McGregor's Theory X and Y, and Herzberg's Two-Factor Theory. For each theory, it describes the main ideas, proponents, strengths and critiques. The document is intended as part of a course on management and administration theories, principles and practices.

1. Theories, Principles and Practices of
Management and Administration
Ganga Dutta Acharya, PhD

2. Course overview (Unit 2)
o Classical theories: 2
o The scientific Management School
o Organizational Management School
o Neo-classical theories 3
o The Hawthorne Experiments
o Maslow’s Theory of Hierarchy of Needs
o Douglas Mc Gregor’s ‘theory X and theory Y’
o Frederick Herzberg’s ‘two-factor theory’
o Modern management theories 2
o System perspective
o Contingency theories
o Contemporary Developments in Administrative Management: New
Public Management (NPM), New Public Governance (NPG) and New
Public Services(NPS) 2
o Participatory Management 2

3. Theories of Management
o Scholars have been researching the most suitable forms of
management for different work settings for long.
o This is where the management theories come into play. Although
some of these theories were developed centuries ago, they still
provide stable frameworks for running the organizations.
o Management theories can broadly be divided as classical, neo-
classical and modern management theories, within which number
of theoretical streams can be found.
1. CLASSICAL THEORIES
1.1 Scientific Management School
Proponents: F.W. Taylor, H. L. Gantt, and Frank and Lillian Gilbreth
o American theorist Taylor is regarded as the pioneer of the SM Theory .
o Taylor and his associates were among the first individuals to study
work performance of the employees scientifically.
o Taylor's principal idea was to simplify tasks so as to increase
productivity.

4. o Taylor broke each job down into its components and designed the quickest and best
methods of performing each component.
o He devised Differential Rate System by encouraging employers to pay
more productive workers at a higher rate than others, using a "scientifically
correct" rate.
o For Taylor, money was the key incentive for working, which is why he
developed the “fair day’s wages for a fair day’s work” concept.
The ultimate aim of scientific management is to help workers reach their full
potential as human beings.
Critiques:
a. SM School is criticized on the ground that it aims at achieving efficiency at
all costs thereby treating workers as slaves of management- treatment of
workers like machine, speeding up works thereby creating a lot of physical
and mental strain on them- tendency to dehumanize the workers.
b. Over-specialization and repetition of jobs under scientific management
makes the workers monotonous and shatters their interest in work which
reduces their efficiency.
c. Another drawback is the absence of non-monetary incentives like job
security, praise, workers participation in management, social recognitions
and urge for self expression etc. These incentives would play an important
role in inspiring workers for better performance.

5. 1.2. Organization Management School
In this school are the works of Max Weber’s bureaucratic theory and Henri Fayol’s
administrative theory.
1.2.1 Bureaucratic Theory of Management
o Max Weber (1864-1920) a German sociologist used the term 'bureaucracy' for
the first time to describe management of the large scale organizations.
“Bureaucracy is an organisational structure that is characterised by many rules, standardised processes,
procedures and requirements, number of desks, meticulous division of labour and responsibility, clear
hierarchies and professional, almost impersonal interactions between employees”.
o He believed that big organizations can be managed effectively through
bureaucracy, where
- All regular activities within the organization can be regarded as official duties;
- Management has the authority to impose rules;
- Rules can easily be respected if there are established methods.
o He postulated six principles for managing an organization effectively and
efficiently
o Task specialization/Division of labor
o Hierarchical authority
o Formal Selection
o Rules and Regulations
o Impersonal
o Carrier orientation

6. 1.2.1 Bureaucratic Management…
• Weber's bureaucratic theory of management has greatly influenced and widely
been applied in the management of government organizations, political
associations and business entities across the globe even today.
• The theory has following advantages
• Structure: A systematic organizational structure can be developed through
bureaucracy where the rules, regulations, methods and procedures are pre-
defined.
• Specialization or Expertise: division of work according to employee's skill,
capabilities and expertise, results in job specialization in the organization.
• Merit-based recruitment of the employees: The employees are recruited on
the basis of merits of their skills and experience with that required for the
vacant job position to ensure that the right person is placed at the right job.
• Predictability: When there is a systematic hierarchy and defined rules and
methods of performing the tasks in the organization, it becomes somewhat
predictable of the outcomes for the management.
• Equality: The management remains unbiased towards the employees and
ensures a fair judgment at the time of any issue or problem in the
organization.
• Systematic Record Keeping: This approach focuses on systematically
recording all the business transactions and operations in documents to be
used by the other employees in future.
• Rationality: The recording of operations brings rationality, i.e., framing the
laws, rules, regulations and procedures for future, based on the experience.

8. Critiques of the Bureaucratic Management Theory
• Max Weber’s contribution to management is highly noteworthy, and
the bureaucratic management theory is practiced widely even today, but it
has also been criticized in several grounds over the years .
• Some of the criticisms are:
• It has highly rigid and strict regulations to follow for the employees and the
managers.
• Informal groups within the organizations play a significant role, but they aren’t
considered important in bureaucratic management theory
• The bureaucracy requires lots of paperwork which contributes to a huge waste of
money, effort and time.
• Bureaucracy runs with large number of rules and formalities which tend to delay
the decision-making process and, thereby, important business tasks.
• The bureaucratic structure does not suit the context where quick decision-making
is required, That’s why it is not appropriate for corporate organizations.
• Human Resource management has limited scope in this type of organization
structure
• Max Weber’s bureaucracy focuses on the technical skills of workers and neglects
the employee’s dedication, hard work and commitment.
• In a bureaucratic structure, it can get difficult for employees and managers to
communicate and coordinate among themselves due to highly hierarchical
structures.

9. 1.2.2 Administrative Management Theory
o Proponents: Henry Fayol, Luther Gullick, Lyndall Urwick, J.D.
Mooney, A.C. Reiley, Mary Parker Follett, R. Shelton, and
others
o This theory basically emphasizes how the management should
interact with the employees so as to overcome drawbacks of
Taylor's Scientific management theory..
o Henry Fayol, a French Scholar, widely considered as a father of
modern management- believed that more emphasis should be
laid on organizational management and the human and
behavioral factors in the management.
o Thus, unlike the Taylor's scientific management theory where
more emphasis was on improving the worker’s efficiency, here
the main focus is on
o how the management of the organization is structured and
o how well the individuals therein are organized to accomplish the tasks
given to them.

10. 1.2.2 Administrative Management Theory
o Here, the focus is on improving the efficiency of management
first so that the processes can be standardized and then moving
to the operational level where the individual workers are made
to learn the changes and implement those in their routine jobs.
o While in the case of the scientific management theory, it
emphasizes on improving the efficiency of the workers at the
operating level first which in turn improves the efficiency of the
management.
o Thus, the scientific management theory followed the bottom-up
approach while the administrative theory follows the top-down
approach of improving managerial functions.
o Fayol proposed five basic functions and fourteen principles of
management which are widely recognized as the basic guidelines
for the management of any organization even today.

11. 1.2.2 Administrative management …..
Five basic functions/elements of Management
a. Forecasting and planning b. Organizing
c. Commanding d. Coordination e. Controlling
Fourteen Principles of Management
1. Division of work
2. Equity
3. Discipline
4. Initiative
5. Authority and Responsibility
6. Scalar of Chain
7. Remuneration
8. Unity of Direction
9. Unity of command
10. Subordination of personal interest to general interest
11. Centralization
12. Order(right person in right place)
13. Stability of tenure
14. Sprite de corps (team spirit)

12. 1.2.2 Administrative management …
Critiques
o The administrative management theory has been severely criticized
for over-emphasis on institutional structure and for ignoring the
human elements of organization i.e. too much preoccupied with the
formal structural part of organization and sometimes that too at the
cost of human factors.
o Like Scientific Management School, this theoretical stream also does
not pay adequate attention to workers..
o Fayol has also ignored the social-psychological or emotional needs of
the employees. Workers are treated as biological machines or inert
instruments in the work process
o Some concepts in the theory are too vague and inconsistent, and lack
empirical evidence, hence the theory suffers from superficiality,
oversimplification and lack of realism (Herbert Simon).
• Despite above stated shortcomings, the importance of this theory cannot
be denied as it formed the bedrock for the modern theories of
organizational management.

13. 2. Neo-Classical Theory
Background
o Neoclassical approach builds on the classical approach, so the neo
classical theories are the extended forms of the classical theories
o Classical theorists specifically focused on the science of creating
specialized work, processes and employees' skills to complete
production tasks efficiently.
o Critics scrutinized classical management theory for its approach of
'standardization' of human beings (employees) as like machines and
its potential harmful effects on workers.
o Neoclassical theorists also called human relational/behavioral
theorists believed that a better understanding of human behavior at
work, such as motivation, conflict, expectations, and group
dynamics, improve the productivity.
o In other words, improved working conditions (empowerment,
participation, positive treatment) lead to increase productivity.

14. Background…
o Neoclassical theories primarily suggest that employee productivity and
motivation can be increased through
• positive social bonds in the workplace, and
• acknowledgement of the worker as a unique individual.
o Elton Mayo, F.J. Roethlisberger, Abraham Maslow, Douglas
McGregor are the main contributors of Neo-classical stream of
management theories
o Neoclassical perspective concentrated on answering questions related
to the best way to motivate, structure, and support employees within
the organization.

15. Background…
Classical Vs Neoclassical Perspective
Points of distinction Classical Neoclassical
Focus functions and economic demand
of workers
Emotion and human qualities
of workers
Structure Impersonal and mechanistic Social system
Application Autocratic management and
strict rules
Democratic process
Emphasize Discipline and rationality Personal security and social
demand
Work goal of worker Maximum remuneration and
reward
Attainment of organizational
goal
Concept about human
nature
Economic being Social being
Content (Theories) Scientific management,
administrative management,
and bureaucratic management
Hawthorne experiment ,
human relation /behavior
movements
Manager-Worker
Relation
Formal Informal
Nature of management Mechanistic Organistic

16. 2.1. Elton Mayo and Fritz J. Roethlisberger's
The Hawthorne Experiments of Management
o Elton Mayo and Fritz J. Roethlisberger, carried out 'The Hawthorne Works
Experiment' at the Western Electric Company, in the US in 1927-32.
o This Experiment provided new insights into individual and group behavior in
organizations and disproved Taylor’s beliefs that science dictate the highest
productivity.
o Key findings of Hawthorne Experiments were:
• Group dynamics (Social Factors) are important determinants of job
performance and output.
• Groups have their own norms and beliefs, independent of the
individual members.
• Individuals are not solely motivated by compensation. Rather,
perceived meaning and importance of one's work are the primary
determinants of output.
• Employees prefer a cooperative attitude from superiors, rather than
command and control.
• Communication between management and employees is essential to
understand employee issues.
• Workplace culture sets production standards - despite standards set by
managers.
o The Hawthorne Experiment was instrumental in understanding the roles of
group behavior and individual psychology in management practice and formed
the foundation of Human Relations and Organizational Behavior theoretical
streams of management

17. 2.2 The Human Relation/Behavioral Perspectives
o Based on the findings of the Hawthorne Experiments several scholars
conducted research in the field of interpersonal and social relations among
the members of the organization and emerged two distinct theoretical
streams: human relation /behavioral movements
o The human relation movement argued that workers respond primarily to the
social context of the workplace, including social conditioning, group norms
and interpersonal dynamics.
o Similarly, some psychologists and sociologists such as Chris Argyris,
Homans Kurt Lewin, R.L. Katz, and others developed the field of
organizational behavior. It involves the study of attitudes, behavior and
performance of individuals and groups in organizational settings. This
approach came to be known as behavioral approach.
o Under this theoretical stream,
o Abraham H. Maslow’s ‘theory of hierarchical needs’,
o Douglas Mc Gregor’s ‘theory X and theory Y’, and
o Frederick Herzberg’s ‘two-factor theory’ are popular in management
studies.

18. 2.2.1 A.H. Maslow’s Theory of the Hierarchy of Needs
o American Psychologist Abraham H. Maslow postulated the hierarchy of needs as a
theory of human motivation in 1943.
o According to Maslow, human beings are motivated by distinct set of needs placed on
an upward trajectory.
o Such needs are five basic types grouped into three categories in hierarchical order,
illustrated as under.

19. 2.2.1 A.H. Maslow’s Theory of the Hierarchy of Needs..
❖ As we can see in the pyramid, human beings have five different types of needs that can be
grouped under three broad categories in which these needs sit.
❖ The two bottom tiers—physiological needs and safety and security needs—are within the
“basic needs” category.
1. Physiological needs include things that we need to survive as human beings. This
includes, but is not limited to food, water, shelter, warmth, and sleep. The “survival ” is
key here.
• Maslow considered physiological needs to be the most essential of our needs. If
someone is lacking in more than one need, they’re likely to try to meet these
physiological needs first.
2. Safety and security needs: Once people’s physiological requirements are met, the next
need that arises is a safety and security needs. The safety and security needs are different
depending on living conditions.
• If you are living in an unsafe environment, the need for physical safety and
security becomes primal.
• If you already live in a physically safe environment, then this need will likely
focus on your financial security such as having a job or saving for retirement,
having insurance, etc.
❖ The next two tiers—love and belonging needs and esteem needs—are within the
“psychological or social needs” category.
3. Love and belonging needs encompass need to be in an intimate loving
relationship, having strong friendships, or having close family ties.
• While this need isn’t as primal as the need for food or shelter, we all need to experience
feelings of love and belonging in order to thrive in this world, and to stave off feelings
of anxiety, depression, and loneliness.

20. 2.2.1 A.H. Maslow’s Theory of the Hierarchy of Needs..
4. Esteem Needs: Esteem needs focus on appreciation, respect, and feelings of
accomplishment.
• The second-from-highest tier in Maslow’s hierarchy of needs, esteem needs fall into
two distinct categories:
• feeling good about ourselves, i.e., our need for self-confidence and feelings of
personal worth
• others feeling good about us, i.e., our need to be recognized and valued for our
accomplishments
❖ And finally, the top tier—self-actualization—is in the “self-fulfillment needs” category.
5. Self actualization needs: Finally, at the top of Maslow’s pyramid of needs is self-
actualization needs, i.e., you become who you are; who you’re destined to be.
• In its simplest form, self-actualized people are those who are living up to their
fullest potential.
• Your core values generally determine what your self-actualization needs look
like, but in general they necessitate that you use your talents to their fullest.
❖ Strengths : Maslow’s hierarchy is simple, orderly, intuitive, widely known and considered
to be of great practical value in management. This hierarchy addressing five needs can be
used by managers to better understand employees’ motivation and address them in ways
that lead to high productivity and job satisfaction. These are perhaps its greatest strengths.
❖ Criticisms: However, many critics point out that the rigid hierarchy of needs is arbitrary,
and there was no any credible empirical research base to validate these hierarchies. This
theory is almost non-testable.

21. 2.2.2 Douglas Mc Gregor’s Theory X and Theory Y
❖ American scholar Douglas Mc Gregor postulated two contrasting theories in the 1960s, in his
book ‘The Human Side of Enterprise’ that explained how managers' beliefs about what
motivates their employees can affect their management style which can be either authoritarian or
participative.
❖ He labelled the authoritarian management style as Theory X and participative management style
as Theory Y.
Theory X
❖ If the manager believes that her team members dislike their work and have little motivation,
then, according to McGregor, she will likely use an authoritarian style of management.
McGregor called this Theory X.
❖ Theory X managers tend to take a pessimistic view of their people and assume that they are
naturally unmotivated and dislike work.
❖ In this approach, manager usually involves micromanaging the employees’ work to ensure that it
gets done properly.
❖ This approach tends to have several tiers of managers and supervisors to oversee and direct
workers.
❖ Authority is rarely delegated, and control remains firmly centralized.
❖ In short, Theory X assumes that people dislike work, have little ambition, and are unwilling to
take responsibility. Managers with this assumption motivate their people using a rigid "carrot
and stick" approach, which rewards good performance and punishes poor performance.

22. 2.2.2 Douglas Mc Gregor’s Theory X and Theory Y…
Theory Y
❖ If the manager believes that her people take pride in their work and see it as a challenge, she will
be more likely to adopt a participative management style, (Theory Y).
❖ Managers who use Theory Y approach trust their people to take ownership of their work and
allow to do it effectively by themselves.
❖ Theory Y managers have an optimistic opinion of their employees, and this encourages a more
collaborative, trust-based relationship between managers and their team members.
❖ Obviously, theory Y has become more popular among organizations
❖ To sum up, managers with Theory Y assume that people are self-motivated and enjoy the
challenge of work. Managers with this assumption have a more collaborative relationship with
their people and motivate them by allowing them to work on their own initiative, giving them
responsibility, and empowering them to make decisions.
Limitations of Theory X and Theory Y
• Both theories have their strengths and limitations.
• The restrictive nature of Theory X, may cause people to become demotivated and non-
cooperative if manager is too strict.
• This may lead to high staff turnover and could damage manager’s reputation in the long
term.
• Conversely, if the manager adopts a Theory Y approach that gives people too much
freedom, it may allow them to stray from their key objectives or lose focus.
• Less motivated individuals may also take advantage of this more relaxed working
environment by shirking their work.

23. 2.2.3 Frederick Herzberg’s ‘Two-Factor’ or ‘Hygiene-Motivation’Theory
❖ American Psychologist F. Herzberg’s hygiene-motivation theory is derived from the outcomes of
several investigations in the 1950s into job satisfaction and job dissatisfaction, studies in USA.
❖ From these studies, Herzberg concluded in an article published in 1959 that human beings have
two sets of needs:
• Lower-level needs as an animal to avoid pain and deprivation
• Higher level needs as a human being to grow psychologically.
❖ The factors that meet first group of needs are called 'hygiene factors’ of the workplace and the
second are called, 'motivators’ or motivational factors.
Hygiene factors:
↓ Salaries and benefits
↓ Working conditions
↓ Physical workspaces
↓ Relationship with colleagues
↓ Relationship with supervisor
↓ Quality of supervisor
↓ Policies and rules
Improving these factors helps to
decrease job dissatisfaction
Motivational Factors:
↑ Performance and achievement
↑ Recognition
↑ Job status
↑ Responsibility
↑ Opportunities for advancement
↑ Personal Growth
↑The work itself
Improving these factors helps to
increase job satisfaction

24. 2.2.3 Frederick Herzberg’s ‘Two-Factor’ or ‘Hygiene-Motivation’Theory….
❖ Herzberg and his colleagues explored the impact of fourteen factors on job
satisfaction and dissatisfaction in terms of their frequency and duration of
impact.
❖ Hertzberg mainly demonstrated that employees are not motivated merely from
more money or benefits or having a comfortable working environment, i.e., from
hygiene factors alone.
❖ The hygiene factors basically help prevent job dissatisfaction in the organization,
but do not necessarily promote job satisfaction (just like good hygiene does not
in itself produce good health, but lack of it will cause disease) and employees’
productivity.
❖ Herzberg terms the hygiene factors also as ‘dissatisfiers’ or ‘maintenance
factors’, since it is their absence or inadequacy which causes employees’
dissatisfaction at work.
❖ The ‘motivating factors’ also termed as ‘growth factors’ are related to what a
person does at work, rather than to the context in which it is done.
❖ Herzberg explains that the two sets of factors are separate and distinct but not the
opposite. They are concerned with two different sets of needs.

25. 2.2.3 Frederick Herzberg’s ‘Two-Factor’ or ‘Hygiene-Motivation’Theory….
❖ The theory proposes that most factors which contribute to job satisfaction are motivators and the factors
that contribute to job dissatisfaction are hygiene elements.
❖ Hence, achievement and promotion prospects are potential job satisfiers while quality of supervision
and job insecurity contribute principally to dissatisfaction.
❖ Herzberg believed that employees value the opportunity to feel part of a team and to grow and develop.
Critical Analysis of the Two-Factor theory
❖ The greatest contribution of this theory in management has been the knowledge that motivation comes
from within the individual; it cannot be imposed by an organization according to some formula.
❖ Many of today’s management trends such as career management, self-managed learning, and
empowerment - have a basis in Herzberg's insights.
❖ Herzberg’s theory is widely appreciated on the ground that it provides an insight into the task of
motivation by drawing attention to the job factors which are often overlooked. The theory has solved
the problems of managers who were wondering why their policies failed to motivate the employees
adequately.
❖ However, the theory is not free from criticism. The critics principally argue that this theory is not
conclusive because the professionals or the white-collar workers may like responsibility and
challenging jobs. But the general workers are motivated by pay and other benefits. The effect of
hygiene and motivational factors may totally be reverse on some other categories of people.

26. 3. Modern Management Theories
• As discussed in previous slides, classical theories largely revolve around
'efficiency' with distinctive focus on organizational 'structures' and 'tasks'. On the
other hand, neoclassical school focus on the 'people' and their interrelationship.
• Both these theoretical streams focused on one aspect at the expense of other.
• Taking account of this limitation, modern theory intakes the balanced root to
investigate the management practices.
• The 'globalization and interconnectedness', the dynamic 'contexts', and associated
'complexities' in which the organizations operate are the three main features that
have shaped the modern management theory.
• In addition to that, diverse needs, aspirations, motives and potential of the
individuals and organizations equally play their part in the modern management
theory.
• There are two fundamental theories under this stream
• System perspective and
• Contingency theory.

27. 3.1 System Perspective
o Proponents/contributors: Chester Barnard, George Homans, Philip Selznick and
Herbert Simon, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn,
W. Buckley and J.D. Thompson..
o System perspective NOT a prescriptive management theory, rather it provides an
opportunity to widen lens through which we can examine and understand
organizational behaviour.
o Views organization as an 'organic' system like human body, composed of
interacting and interdependent parts, called subsystems. Four sub-system of an
organization- task, structure, people and environment. The sub-systems should be
studied in their inter- relationships rather, than in isolation from each other.
o An organization is made up of closed systems and open systems. Closed systems
are the internal sub-units of the organization that do not interact with the external
environment. Open systems are internal sub-units that interact with other systems
(or sub-units within other systems) that are outside of the organization. In effect, all
organizations are open systems.
o Interestingly, classical and neoclassical management theorists view organizations as
a closed system whereas modern management theorists treat organization as an
open system.

28. 3.1 System Perspective…..
o The open system means that organizations consistently interact with external
environment such as government agencies, customers and suppliers of the goods and
services on regular basis and these different stakeholders affect the performance of the
organizations.
o Thus, System perspective conveys the multidisciplinary viewpoint from several
context including, economic, society, nature, information technology and institutions.
o The system approach envisions the organization as made up five components:
• Inputs - Raw Materials, Human Resources, Capital, Information, Technology
• A Transformational Process - Employee Work Activities, Management
Activities, Operations Methods
• Outputs - Products or Services, Financial Results, Information, Human Results
• Feedback - Results from outputs influence inputs.
• The Environment - These components make up internal and external factors
that affect the system.

29. 3.1 System Perspective…..
Strengths
o Adopts a holistic view- “Big Picture”,
o Gets root causes of the complex problems.
o Probabilistic rather than a deterministic
Limitations
o Abstract- does not offer a ‘quick fix’ solutions to practical problems
o Does not adequately address power and social inequality issues.
o No any prescribed tools and techniques for practicing managers.

30. 3.2 Contingency or situational theory of management
Proponents/Contributors:
Paul Lawrence, Jay Lorsch, Tom Burns, John Woodard, James Thompson, etc.
Basic premise:
Management problems are contextual - different under different situations- and require to be
tackled as per the demand of the situation.
o Modern-day organizations are more complex and therefore one specific managerial strategy
could not be applied to all types of situations.
o The behaviour of an organisation is said to be contingent on forces of environment and hence
any standard universal principle of management does not work for all.
o Hence, the emphasis of contingency approach is on the adaption of managerial strategies as
per the need of situation and each situation should be viewed separately, and the plans should
be made while taking into consideration a wide range of internal and external factors to
administer the context, connectedness and complexities of the dynamic environment.
o Based on the scenario, a best fit of the managerial approach for the situations should be
implemented. This theory emphasizes on the postulate that organizational outcomes are
resultant of a fit between two or several factors.
o Every organization is unique and hence the management decision and structures must be
unique. The manager must understand the uniqueness and complexity of each situation. There
should be a match between the situation and the manner of dealing.
o Limitations:
o ignores the universally applicable principles.
o fails to enlist all contingency variables.
o focuses on the mere situation but which tools should be used in what situation is not
specified.

31. Thank you