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 organisation and the functions of executives in organisations.
Chester Barnard looked at organisations as systems of co-operation 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 organisation that can claim a substantial age is the Catholic Church.
According to Chester Barnard, this happens because organisations 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 organisational efficiency is substantially different from the conventional use of the word. He defines efficiency of an organisation as the degree to which that organisation is able to satisfy the motives of the individuals. If an organisation satisfies the motives of its participants, and attains its explicit goals, co-operation 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 organisation is functioning
- Every communication should be authenticated.
Thus, what makes a communication authoritative rests on the subordinate rather than in the boss; 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 incentives;
The specific inducements are:
- 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 Executive' 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 summarising 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 organisational purpose and objectives.
Key Concepts of Chester Barnard’s Studies
Importance of an individual’s behaviour; he felt other theorists had under-estimated the variability of individual behaviour and impact of this on organisational effectiveness:
Barnard formulated a concept of a 'zone of indifference' - orders should be perceived in neutral terms to be carried out without concious questioning of authority. Incentives can be used to expand this notional zone; however, material incentives alone have been proven to be limited in their ability to effect compliance.
In essence a central concept - decision making processes depend on communications. Barnard described characteristics and focused on importance of communication in informal organisations.
Organisations are made up of individual humans with individual motivations. Every large organisation includes smaller, less formal groupings whose goals need to be harnessed to those of the whole organisation – this is management responsibility.
Management Efficiency v Effectiveness
Authority only exists in as far as the people are willing to accept it; 3 basic principles for ensuring effectiveness of communication 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 ( a modern day collective) – real role of the Chief Executive is to manage the values of the organisation.