Classical and Neoclassical Theory of Management

What is Classical Theory?

Classical Theory is a theory shows that workers do not need social and job satisfactions status. This theory says that workers need only physical and economic status and needs.

This theory is designed to enhance the productivity of the workers. this idea arose in the late 19th century and gained prominence through the first half of the 20th century.

Advantages of Classical Theory

  1. It has a more focused area of output than human beings.
  2. It builds an accounting model for the business.
  3. It is assumed that employees want to change with time.
  4. It is assumed that authority and control should be centralized.
  5. It helps to classify employees on the basis of their skills.

What is Neoclassical Theory?

Neoclassical Theory is based on primarily focused on human beings in the organization. This approach is referred to as “behavioral theory of organization” or “human relations” approach in organizations.

Classical and Neoclassical Theory of Management


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