The criticism of scientific and administrative management as advocated by Taylor and Fayol respectively gave birth to the behavioral approach to management. They were criticized by several behavioral scientists for their indifference and insensitiveness to the human side of managemental dealings. Instead of taking a mechanistic view of workers as creatures with only economic needs, behavioral scientists came to consider them as people with social and psychological needs, too, such as recognition, respect, social contact, freedom, and achievement. To them, a business organization is a psycho-social system with a primary focus on the human side.

Taylor and Fayol are criticized for not considering the human sides of workers and employees in their theories.

A good number of sociologists and psychologists like Abraham Maslow, Hugo Munsterberg, Renesys Likert, Douglas McGregor, Frederick Herzberg, Mary Parker Follet, and Chester Barnard are the major contributors to this school of thought, which is further subdivided by some writers into the Human Relations approach and the Human Behavioral approach, the latter being considered as a modified version of the former.

The Human Relations theory recognizes the social and psychological factors.

By far the most important contribution to human relations school of thought was made by Elton Mayo and his colleagues through their famous Hawthorne study. According to them, employees do not only have economic needs but also social and psychological needs, which are to be satisfied to motivate them.

McGregor, Likert, Chester Barnard, Kurt Lewin, and others, classified as exponents of the Human Behavioral school, modified the Classical Human Behavior approach of Mayo. They considered the human side of the enterprise as an interactive subsystem of the total organizational system. As distinguished from the classical human relations theory, the Human Behavioral school is devoid of emotional content and emphasizes the synchronization of group goals within the broader framework of management. It does not consider the goals of the different groups of employees and managers - as conflicting with each other, but rather cooperative.

The Human Behavioral school emphasizes the synchronization of group goals.

The Human Relations school views an organization as a psycho-social system in which workers and employees are human beings in the first place. The Human Relations theory of management arose out of a reaction against the Scientific and universal management process theories of Taylor and Fayol respectively. The main criticisms leveled against them are their indifference to and neglect of the human side of the enterprise. Employees, according to their critics, were viewed as mere parts to be fused in the job structure disregarding their human needs and aspirations.

While Taylor and Fayol view people at work merely as economic beings the Human Relations theorists emphasize the need to view them as social beings Principles of Management with social and psychological needs such as recognition, respect, achievement, and social contact. This school regards a business organization as a psycho-social system with much emphasis on the human side. Human relations experts believe that management should recognize the need of employees for recognition and social acceptance. Therefore, managers need not only technical skills but also human relations skills to interact with their subordinates as human beings. Followers of this school believe that managers must know why their subordinates behave as they do and what psychological and social factors influence them. According to these theorists, since groups provide members with feelings of acceptance and dignity, management can look upon the work group as a potential productive force.

A good number of sociologists and psychologists like McGregor, Likert, Munsterberg Simon, etc. contributed to the development of the Human Relations School of Management. However, Elton Mayo and Hugo Munsterberg are considered pioneers of this school. But by far the most important contribution to this school of thought was made by Elton Mayo and his associates through the Hawthorne plant of the Western Electric Company between 1927 and 1932.

The findings of Mayo and his colleagues from Hawthorne's studies led to the conclusion that a human/ social element operated in the workplace and that productivity increases were as much an outgrowth of group dynamics as of managerial demands and physical factors. Another important suggestion that came from the Hawthorne studies was that social factors might be as powerful a determinant of worker-productivity as were financial motives. Mayo found that informal work groups grew out of formal organization with their leaders, influence systems, norms for appropriate behavior, and pressures for conformity to maximum and minimum acceptable levels of performance.

The human/ social factor plays a prominent role in the workplace according to Mayo Studies. Improvement of productivity, according to Mayo and his colleagues, is the result of such social factors as morale, satisfactory interrelationships between members of a workgroup, a sense of belonging, and effective management. It is this kind of management with an understanding of human behavior, particularly group behavior, that serves an enterprise through such interpersonal skills as motivating, counseling, leading, and communicating. “This phenomenon,” according to Weinrich and Koontz, "arising basically from people being noticed has been known as the Hawthorne effect."

The most important contribution of Hawthorne's studies is that employees or workers are social beings, and work in organizations is not merely a matter of machinery and methods but also of fitting them into a social system resulting in a complete socio-technical system. This led to the recognition of managers as people operating in a social system and they must have some knowledge or understanding of behavioral sciences as applied to management. In other words, Mayo and his associates underscored the need for a greater and deeper understanding of the social and behavioral aspects of management.