June 21st, 2012 Chester Barnard
Chester Irving Barnard (1886 – 1961) was a telecommunications executive and author of Functions of the Executive, an influential 20th century management book, in which Barnard presented a theory of organization and the functions of executives in organizations.
Chester Barnard looked at organizations as systems of cooperation of human activity, and was worried about the fact that they are typically rather short-lived. Firms that last more than a century are rather few, and the only organization that can claim a substantial age is the Catholic Church.
According to Chester Barnard, this happens because organizations do not meet the two criteria necessary for survival: effectiveness and efficiency.
Effectiveness, is defined the usual way: as being able to accomplish the explicit goals. In contrast, his notion of organizational efficiency is substantially different from the conventional use of the word. He defines efficiency of an organization as the degree to which that organization is able to satisfy the motives of the individuals. If an organization satisfies the motives of its participants, and attains its explicit goals, cooperation among them will last.
Two of his theories are particularly interesting: the theory of authority and the theory of incentives. Both are seen in the context of a communication system that should be based in seven essential rules:
- The Channels of communication should be definite.
- Everyone should know of the channels of communication.
- Everyone should have access to the formal channels of communication.
- Lines of communication should be as short and as direct as possible.
- Competence of persons serving as communication centers should be adequate.
- The line of communication should not be interrupted when organization is functioning.
- Every communication should be authenticated.
Thus, what makes a communication authoritative rests on the subordinate rather than in the boss. Thus, he takes a perspective that was very unusual at that time, close to that of Mary Parker Follett, and is not that usual even today. One might say that managers should treat workers respectfully and competently to obtain authority.
In the theory of incentives, he sees two ways of convincing subordinates to cooperate: tangible incentives and persuasion. He gives great importance to persuasion, much more than to economic incentives. He described four general and four specific incentive.
The specific inducements were:
- Material inducements such as money
- Personal non-material opportunities for distinction
- Desirable physical conditions of work
- Ideal Benefactions, such as pride of workmanship etc.
The book 'Functions of the Exective' is complex, not light reading. His main objective, as indicated by the title, is to discuss the functions of the executive, but not from a merely intuitive point of view, but deriving them from a conception of cooperative systems based on previous concepts.
Barnard ends by summarizing the functions of the executive (the title of the book) as being:
- The establishment and maintenance of the system of communication
- The securing of the essential services from individuals
- The formulation of the organizational purpose and objectives
Key concepts of Chester Barnard's Studies
Importance of an Individual's behaviour
Felt other theorists had underestimated the variability of individual behaviour and impact of this on organizational effectiveness.
Concept of "zone of indifference" – orders must be perceived in neutral terms to be carried out without conscious questioning of authority. Incentives,can be used to expand zone, but material incentives alone limited in their ability to effect compliance – need also use status, prestige, personal power.
Central concept – decision-making processes depend on communications, he described characteristics and focussed on importance of communication in informal organisation.
Organisations made up of individual humans with individual motivations. Every large organization includes smaller, less formal groupings whose goals need to be harnessed to those of the whole – this is managements responsiblity.
Management Efficiency vs. Effectiveness
Authority only exists in so far as the people are willing to accept it. 3 basic principles for ensuring effectiveness of communications are;
- Everyone should know what the channels of communication are
- Everyone should have access to a formal channel of communications
- Lines of communication should be as short and direct as possible
Managers key tasks are to set up systems to motivate employees towards the organisation's goals – individuals working to a common purpose rather than by authority – real role of Chief Exec is to manage the values of the organisation.