Classical and Neoclassical Theories of Management

CLASSICAL THEORY OF MANAGEMENT
Reporter:
Miss Angie A. Pasaforte

Guihulngan City
CLASSICAL THEORY
• It is the traditional theory, wherein more
emphasis is on the organization rather than
the employees working therein. According
to the classical theory, the organization is
considered as a machine and the human
beings as different components/parts of that
machine.
CHARACTERISTICS:
• It is built on an accounting model.
• It lays emphasis on detecting errors and correcting them
once they have been committed.
• It is more concerned with the amount of output than the
human beings.
• The human beings are considered to be relatively
homogeneous and unmodifiable. Thus, labor is not divided
on the basis of different kinds of jobs to be performed in an
organization.
CHARACTERISTICS:
• It is assumed that employees are relatively
stable in terms of the change, in an
organization.
• It is assumed that the authority and control
should be vested with the central authority
only, in order to have a centralized and
integrated system.
Some writers of the classical theory emphasized on
the technological aspects of the organization and how
the individuals can be made more efficient, while
others emphasized on the structural aspects of an
organization so that individuals collectively can be
made more efficient. Thus, this purview of different
writers resulted in the formation of two distinct
streams:
•Scientific Management Stream
•Administrative Management Stream
Thus, according to this theory the human beings are
just considered as a means of production.
Timeline
• The classical theory was

used from 1850-1920
Key Concepts
• Classical school emphasized a scientific approach to study
management and wanted to make organizations run like a
well oiled machine.
• Scientific management helped develop a standard way of

performing each job, selected appropriate workers, trained
workers to use that method and provided incentives.
• Administrative principles have 5 basic functions that

include: planning, organizing, commanding, coordinating
and controlling.
Key Players & Major
Contributors
 Frederick Taylor - Father of Scientific Method. Analyzed
jobs to make them highly effective. Scientific
Management:
 1. Develop a procedure for each job.
 2. Job specialization.
 3.Train workers scientifically
 4. Plan and Schedule work.
 5. Establish methods and times for each job.
 6. Use incentives
Key Players & Major
Contributors
 Frank and Lillian Gilbreth developed more efficient work procedures.
 Henry Gantt developed a method for scheduling work.
 Henri Fayol "Father Of Modern Management" had five key concepts

of management
 1.Planning
 2. Coordination
 3. Organizing
 4. Controlling
 5. Commanding
The Classical School of
Organization Theory
They were the 1st to develop such a theory as
a foundation which later scholars built their
own work.
They stress the structural arrangements of
organization as machine-like .
For these theorists efficiency is the most
important value.
Classical Theorists assume:-
1. There is a single best way to structure an
organization to maximize productivity that can
be recognized by systematically examining the
way organizations behave.
2. They emphasize the need for a division of labor.
3. They also emphasize hierarchal structure, chains
of command with formal systems of authority
and bureaucratic behavior.
Adam Smith
He saw Modern Organizations as
“Force Multipliers”
They allow for the labor of individual parts to
be combined in such a way that the sum of
their efforts is greater than those of their
parts.
Like a machine it allows for efficiency
of productivity.
Frederick Taylor
“Scientific Management” = Time & Motion Studies
Specific steps & procedures of implementation
Scientific management assumes four fundamental
values:-
 Efficiency = max. goals + min. cost
 Rationality = the most direct relationship of work
to the organization’s objectives
 Productivity = the highest poosible level.
 Profit = which is the ultimate goal.
Scientific management makes
three main assumptions:-
1. Authority:- is best when highly centralized
at the top levels of management.
2. The ideal way to perform a task is through
scientific research.
3. Management’s job is :-
 Select ----- capabilities.
 Organize ----- to best perform.
 Train ----- to achieve objectives.
Criticism
Critics say :-
Theorists of these theories look at
workers as mere cogs, motivated only
by financial incentives.
Classical Theorists
Assume that workers are:-

rational
and economically
motivated.
NEOCLASSICAL THEORY OF MANAGEMENT
Reporter:
Miss Christine Dodjieh O. Cańete

Guihulngan City
• It is the extended version of the

classical theory wherein the behavioral
sciences gets included into the
management. According to this theory,
the organization is the social system,
and its performance does get affected
by the human actions.
• focused on the human beings in the

organization.
• This approach is often referred to as
“behavioral theory of organization” or
“human relations” approach in
organizations.
NEOCLASSICAL THEORY
• posits that an organization is the

combination of both the formal and
informal forms of organization, which is
ignored by the classical organizational
theory.
NEOCLASSICAL THEORY
• asserts that an individual is diversely

motivated and wants to fulfill certain needs.
The communication is an important
yardstick to measure the efficiency of the
information being transmitted from and to
different levels of the organization.
NEOCLASSICAL THEORY
• The teamwork is the prerequisite

for the sound functioning of the
organization, and this can be
achieved only through a behavioral
approach, i.e. how individual
interact and respond to each other.
The neoclassical school of
organizational theorists
Like classical theorists they still measure
administrative capacity by efficiency.
But they emphasize :-
1- decision making as the heart and soul of
administration.
2- organizational roles over individual roles.
Herbert Simon
He viewed decision making as the central act

of administration, and proposed that the
individual decision maker is rational only
within the environmental context of the
particular organization.
Thus:- The facts of any circumstance are
validated by the given set of values in
which those facts or actions occur.
Simon’s Important Ideas
 He was te first to distinguish
“programmed” and “unprogrammed”
decisions.
 He emphasized the importance of
“management information systems”.
 He pioneered improved organizational
decision making through quantitative
methods.
 He led the way in studying the process by
which administrative organizations make
decisions.

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CLASSICAL THEORY OF MANAGEMENT

Miss Angie A. Pasaforte

• The classical theory was

• Scientific management helped develop a standard way of

• Administrative principles have 5 basic functions that

 Henry Gantt developed a method for scheduling work.

 Henri Fayol "Father Of Modern Management" had five key concepts

Assume that workers are:-

Miss Christine Dodjieh O. Cańete

• It is the extended version of the

• focused on the human beings in the

• posits that an organization is the

• asserts that an individual is diversely

• The teamwork is the prerequisite

He viewed decision making as the central act

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