Neo-classical Theory, also known as the Human Relations Approach, emphasizes that productivity is linked with employee satisfaction. This approach gives greater emphasis to individual and group relationships in the workplace. While pre-scientific thinkers like Robert Owen introduced welfare measures and Henry Fayol advocated for fair remuneration , the Neo-classical theory, particularly the Hawthorne Experiments, formally concluded that factors beyond physical working conditions (like social satisfaction, feelings, and emotions) are the most powerful in influencing employee behavior and productivity. The Classical Theory focuses more on job content, division of labor, and a scientific approach to organization. Modern Theory (Systems Approach) views an organization as an adaptive system interacting with its environment, which is a broader perspective.
