NEOCLASSICAL MANAGEMENT THEORY: CHARACTERISTICS AND REPRESENTATIVES - DUDAS - 2024

The classical theory of administration determined basic concepts and fundamental principles within organizations, such as linear or functional structure, the rationality of work and departmentalization.

Despite the changes and advances and beyond the introduction of new terms, these concepts remain today as fundamental pillars of management at a general level.

The neoclassical school, far from opposing these and other concepts, continues and perfects them, seeking complementary techniques to those already proposed by the precursors since the beginning of the 20th century.

The height of this school occurred between 1930 and 1948, that is, between the great economic depression and the end of the Second World War.

This world economic situation brought new characteristics to the global scene that should be the object of study, analysis and adaptation of the new companies that were beginning to emerge.

This newly arrived scenario implied, in addition to the usual search for efficiency, greater automation in production processes and therefore, a reduction in the use of labor, as well as an increase in the number of organizations and a horizontal growth of said organizations. organizations, now having multiple purposes.

The need to define the new role of administrators was raised and this was the object of study of neoclassical theory.

Background

The world changed drastically and definitively after several events that marked the beginning of the 20th century. These include the following:

• The Second World War
• The economic might assumed by the United States
• The accentuation of economic concentration
• Rapid technological advances

This new reality and its characteristics forced the administration to suffer from adaptations, such as:

• Technical adaptations that respond to technological changes.
• Technical adaptations that respond to the automation of the systems.
• Adaptation of directive procedures and standards that respond to the new purposes of the organization.
• Creation of new controls adapted to the new structures.
• Creation or modernization of departmentalization principles that respond to the new multi-purpose of organizations.

Characteristics of the neoclassical theory of administration

Understood as a social activity, the administration is susceptible to being located within currents of thought and theories that vary according to the historical moment that the world is going through.

In the case of neoclassical theory, these were its main characteristics:

1- Pragmatic

The pragmatism and the search for concrete results in the exercise of the administration is the main objective and it uses the theoretical concepts of the administration.

2- Firming

The previous classical postulates are largely taken up by the neoclassicals, they resize and restructure them according to the new realities, in order to give greater precision and coherence to the administration, to make it more comprehensive and flexible.

3- Principle

The neoclassicals emphasize the general principles of administration such as planning, organizing, directing and controlling the work of subordinates.

4- Result

The emphasis on methods and the rationalization of work proposed by scientific administration was displaced by the neoclassicals, who concentrated on goal orientation and the search for results.

5- Eclectic

Although they are based on classical theory, neoclassicals only take from it and other theories what they consider to be useful and true.

Contributions of neoclassical theory

Neoclassical theory discusses and updates terms such as efficiency versus effectiveness, centralization versus decentralization, or authority and responsibility.

It also defines the scope of control –limiting the number of subordinates per superior– and the importance and adequacy of the organization chart and function, authority and responsibility manuals as fundamental tools for structuring new organizations.

Management by objectives (APO) is a concept introduced by neoclassicals that still governs most large organizations around the world today.

It is a dynamic process in which all levels of the organization (managers, principals and subordinates) identify objectives, define and distribute responsibilities and draw up strategies to achieve their fulfillment.

Under this scheme, performance standards are established that will later serve for objective evaluation, by comparing the results achieved with those expected.

The ACME model (for the acronym of Association of Consulting Management or Engineers) is another good example of a model of organizational structure created by the neoclassicals.

The work was called “Norms of the relationship between functional activities and the management elements of the company” and it is still applied today.

The scheme proposed by this work includes all the basic areas of administration: research and development, production, marketing, finance and control, secretarial and legal, personnel administration and external relations.

Representatives of neoclassical theory

Peter F. Drucker

Peter F. Drucker is considered the father of neoclassical theory. He defended the concept of management by objectives and coined phrases like “privatization” and “knowledge worker”.

He envisioned the importance of industrial organizations within society, even more influential than the Church or the State itself.

His ability to unite the theoretical with the practical, the analytical and the emotional, the private and the social within the study of administrative management is recognized.

Harold Koontz

He was a consultant for the largest and most important North American companies in North America and co-author, along with Cyril J. O'Donnell, of the book "Principles of Management", considered a cornerstone in the study of modern management.

He based his approach on human relationships, whose principle - he said - is "manage with tact."

Ernest dale

A German economist born in 1917, he developed the empiricism in the administration that determines that the exercise of the profession allows the correct decision-making in the conjunctural moments.

References

1. Administrative Theories. Recovered from admonteorias2012.blogspot.com.ar
2. Neoclassical Theory Peter Drucker. Recovered from teoadministrativas1.blogspot.com.ar
3. Neoclassical economics. Recovered from es.wikipedia.org
4. María Andrea Castillo and Xavier Saldaña (2013). Neoclassical Theory of Administration. Cesar Vallejo University. Recovered from en.calameo.com
5. Francisco Velásquez Vásquez (2002). Schools and interpretations of administrative thought. Recovered from scielo.org.co.