Hawthorne Experiment: In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of the Harvard Business School

were invited to join in the studies at the Hawthorne Works of Western Electric Company, Chicago. The experiment lasted up to 1932. The Hawthorne Experiments brought out that the productivity of the employees is not the function of only physical conditions of work and money wages paid to them. Productivity of employees depends heavily upon the satisfaction of the employees in their work situation. Mayos idea was that logical factors were far less important than emotional factors in determining productivity efficiency. Furthermore, of all the human factors influencing employee behaviour, the most powerful were those emanating from the workers participation in social groups. Thus, Mayo concluded that work arrangements in addition to meeting the objective requirements of production must at the same time satisfy the employees subjective requirement of social satisfaction at his work place. The Hawthorne experiment consists of four parts. These parts are briefly described below:1. 2. 3. 4. Illumination Experiment. Relay Assembly Test Room Experiment. Interviewing Programme. Bank Wiring Test Room Experiment.

1. Illumination Experiment: This experiment was conducted to establish relationship between output and illumination. When the intensity of light was increased, the output also increased. The output showed an upward trend even when the illumination was gradually brought down to the normal level. Therefore, it was concluded that there is no consistent relationship between output of workers and illumination in the factory. There must be some other factor which affected productivity. 2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only the impact of illumination on production but also other factors like length of the working day, rest hours, and other physical conditions. In this experiment, a small homogeneous work-group of six girls was constituted. These girls were friendly to each other and were asked to work in a very informal atmosphere under the supervision of a researcher. Productivity and morale increased considerably during the period of the experiment. Productivity went on increasing and stabilized at a high level even when all the improvements were taken away and the pre-test conditions were reintroduced. The researchers concluded that socio-psychological factors such as feeling of being important, recognition, attention, participation, cohesive work-group, and non-directive supervision held the key for higher productivity. 3. Mass Interview Programme: The objective of this programme was to make a systematic study of the employees attitudes which would reveal the meaning which their working situation has for them. The researchers interviewed a large number of workers with regard to their opinions on work, working conditions and supervision. Initially, a direct approach was used whereby interviews asked questions considered important by managers and researchers. The researchers observed that the replies of the workmen were guarded. Therefore, this approach was replaced by an indirect technique, where the interviewer simply listened to what the workmen had to say. The findings confirmed the importance of social factors at work in the total work environment. 4. Bank Wiring Test Room Experiment: This experiment was conducted by Roethlisberger and Dickson with a view to develop a new method of observation and obtaining more exact information about social groups within a company and also finding out the causes which restrict output. The experiment was conducted to study a group of workers under conditions which were as close as possible to normal. This group comprised of 14 workers. After the experiment, the production records of this group were compared with their earlier production records. It was observed that the group evolved its own production norms for each individual worker, which was made lower than those set by the management. Because of this, workers would produce only that much, thereby defeating the incentive system. Those workers who tried to produce more than the group norms were isolated, harassed or punished by the group. The findings of the study are:-

Each individual was restricting output. The group had its own unofficial standards of performance. Individual output remained fairly constant over a period of time. Informal groups play an important role in the working of an organization.

Contributions of the Hawthorne Experiment: Elton Mayo and his associates conducted their studies in the Hawthorne plant of the western electrical company, U.S.A., between 1927 and 1930. According to them, behavioral science methods have many areas of application in management. The important features of the Hawthorne Experiment are:1. 2. 3. A business organization is basically a social system. It is not just a techno-economic system. The employer can be motivated by psychological and social wants because his behavior is also influenced by feelings, emotions and attitudes. Thus economic incentives are not the only method to motivate people. Management must learn to develop co-operative attitudes and not rely merely on command.

4. 5. 6. 7.

Participation becomes an important instrument in human relations movement. In order to achieve participation, effective two-way communication network is essential. Productivity is linked with employee satisfaction in any business organization. Therefore management must take greater interest in employee satisfaction. Group psychology plays an important role in any business organization. We must therefore rely more on informal group effort. The neo-classical theory emphasizes that man is a living machine and he is far more important than the inanimate machine. Hence, the key to higher productivity lies in employee morale. High morale results in higher output.

Criticism of Hawthorne Studies / Experiments The Hawthorne Experiments are mainly criticized on the following grounds :-

1. Lacks Validity: The Hawthorne experiments were conducted under controlled situations. These findings will not work in real setting. The 2. More Importance to Human Aspects: The Hawthorne experiments give too much importance to human aspects. Human aspects alone cannot
improve production. Production also depends on technological and other factors. workers under observation knew about the experiments. Therefore, they may have improved their performance only for the experiments.

3. More Emphasis on Group Decision-making: The Hawthorne experiments placed too much emphasis on group decision-making. In real 4.
5. The Human Relations Movement Fred Luthans defines Organizational Behavior as "the understanding, prediction and management of human behavior in organizations." According to Fred Luthans, three major events took place which led to the Human Relations Movement these were The Great Depression The Rise of Trade Unionism The Hawthorne experiments The Great Depression Prior to the industrial revolution, people worked in small groups and had simple work relationships. They were however subjected to unhealthy working conditions and scarcity of resources, so they hardly had any job satisfaction. During the early stages of industrial revolution, the conditions of workers showed no signs of improvement. However, as increased industrial activity led to greater supply of goods and wages, the level of job satisfaction gradually improved. The Great Depression however made people realize that production could no longer be the only major responsibility of Management. The depression left in its wake severe problems of unemployment, discontent and insecurity which gradually led to greater importance given to the management of personnel. The Human factor gradually but quickly gained more and more importance. The Rise of Trade Unionism The passage of the Wagner Act led to emergence of organized labour movement. The revival of militant unionism triggered workers' interests in business activities of the organization. In India, the Trade Union Act 1926 enforced the belief that organized labour movements were here to stay. The only way to deal with organized labour movements or Trade Unions was to understand the foster the Human Relations. This gave the added impetus to the Human Relations Movement. The Hawthorne experiments The Hawthorne Works of the General Electric Company was a progressive organization. However, its managers were disturbed by the large number of complaints and high level of dissatisfaction among workers. The company hired efficiency experts to find out the cause of the problem, but the investigations failed. Later the Company requested the National Academy of Sciences to help them. situation, individual decision-making cannot be totally neglected especially when quick decisions are required and there is no time to consult others. Over Importance to Freedom of Workers: The Hawthorne experiments give a lot of importance to freedom of the workers. It does not give importance to the constructive role of the supervisors. In reality too much of freedom to the workers can lower down their performance or productivity.

SOCIAL SYSTEM APPROACH Organization is essentially a cultural system composed of people who work in cooperation. For achieving organization goals, a cooperative system of management can be developed only by understanding the behavior of people in groups,thus its the understanding of the behavior of groups & individuals. `System approach', has four major components. Inputs consist of the following resources namely: human, material, finance and equipment that are required to produce goods and services. Transformation processes consist of an organization's managerial and technological abilities, applied to convert inputs into outputs. Outputs are the products and services produced by the organization. Feedback is response that is received about performance, and about the status of the organization. Organizations are, either open or close systems. An organization that does not interact with its environment is considered close. On other hand, an organization that is classified as an open system tends to be in a dynamic relationship with the environment. Such organizations receive inputs from both internal and external sources. Outputs are produced by transforming these inputs. Features 1. Social System is a system of cultural relationship 2. Relationship exist between external and internal environment of the organization. 3. Formal Organization-Cultural relationships of social groups working within the organization. 4. Co-operation necessary 5. Efforts directed -harmony between goals of organization& goals of groups. DECISION THEORY APPROACH Simple decisions usually need a simple decision-making process. But difficult decisions typically involve issues like these: Uncertainty - Many facts may not be known. Complexity - You have to consider many interrelated factors. High-risk consequences - The impact of the decision may be significant. Alternatives - Each has its own set of uncertainties and consequences. Interpersonal issues - It can be difficult to predict how other people will react. With these difficulties in mind, the best way to make a complex decision is to use an effective process A logical and systematic decision-making process helps you address the critical elements that result in a good decision. By taking an organized approach, you're less likely to miss important factors, and you can build on the approach to make your decisions better and better. There are six steps to making an effective decision: Create a constructive environment. Generate good alternatives. Explore these alternatives. Choose the best alternative. Check your decision. Communicate your decision, and take action. Business Ethics and Social Responsibility Concept Ethics: An individuals personal beliefs about whether a behavior, action, or decision is right or wrong, in other words, its the moral obligation involving distinction between right and wrong. Ethical behavior: Behavior that conforms to generally accepted social norms Unethical behavior: Behavior that does not conform to generally accepted social norms. Business Ethics: It is the standards of conduct and moral values governing actions and decisions in the work environment. Managerial ethics: Standards of behavior that guide individual managers in their work Managerial ethics The three basic areas of concern for managerial ethics are the relationships of the Firm to the employee Employee to the firm Firm to the other economic agents (Managers need to approach each set of relationships from an ethical and moral perspective) Shift to ethics Business creates problems and should therefore help solve them Corporations are citizens in our society Business often has the resources necessary to solve problems Business is a partner in our society, along with the government and general population Tools of ethics Specialized knowledge (background of the situation) Whistle-blowing

Ethical code of conduct Social responsibility The set of obligations an organization has to protect and enhance the societal context in which it functions. Areas of social responsibility Stakeholders Natural environment General social welfare (Some organizations acknowledge their responsibilities in all three areas and strive diligently to meet each of them. Few others emphasize only one or two and few do not acknowledge it at all)

Stakeholders Local Government Creditors Customers Local community Suppliers Employees Interest groups Trade associates Owners/investors Courts Colleges and universities

General Social welfare Charities Health Education Public awareness Human rights protection

Natural environment Depletion of Ozone layer Global warming Extinction of animal species Disposal of industrial waste Recycling Reusing Recreating