Introduction
Chester Barnard, born in 1886, is recognized as one of the foremost administrative thinkers. Throughout his career, he held various administrative positions in the industry. Drawing from his extensive experience as an executive, Barnard combined his insights based on practical observation and experience.
His two influential works, "The Functions of the Executive" (1938) and "Organisation and Management" (1948), are considered foundational for understanding behavioral activities in management. Barnard viewed organizations as social systems and is regarded as the spiritual father of the Social Systems School of Management.
Organisation as a Cooperative System
Chester Barnard sees an organisation as a cooperative system that is deliberately coordinated to achieve a specific purpose. He believes that every organisation is a small part of a larger system, ultimately belonging to society. No organisation is self-sufficient; it relies on other political, social, economic, and cultural systems for various resources. Barnard identifies three essential elements of an organisation:
- A group of individuals capable of communicating with one another.
- A common goal to be achieved.
- Coordination and cooperation among group members to accomplish the common goal.
Barnard emphasises the importance of interactions among members as a fundamental basis for an organisation's existence. He believes that the group should be willing to contribute to the achievement of a common purpose. People organise themselves to accomplish tasks that they cannot do alone, making cooperation the foundation of an organisation.
Question for Functions of the Executive (C.I. Barnard)
Try yourself:
What does Chester Barnard view as the foundation of an organisation?Explanation
- Chester Barnard believes that cooperation among group members is the foundation of an organisation.
- He emphasizes the importance of individuals working together to achieve a common goal.
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- Chester Barnard believed that informal organisations are present within all formal organisations. He argued that formal organisations are composed of informal groups, which eventually evolve into informal organisations. According to Barnard, both formal and informal organisations are necessary for each other's existence, and neither can function effectively without the other. He proposed that informal organisations in formal work settings should be embraced and aligned with formal organisations.
- Barnard viewed informal organisations as communication networks that reinforce the formal organisational communication structure. In his definition of effective organisational functioning, he highlighted the importance of formal goal setting and the socio-psychological acceptance of these goals. A formal organisation, as defined by Chester Barnard, is “ a system of consciously coordinated activities or forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a definite measure of authority, responsibility, and accountability.”
The essence of a formal organisation is built around four key pillars:
- Division of labour
- Scalar and functional processes
- Structure
- Span of control
Thus, a formal organisation results from planning, with the structure pattern predetermined by top management. In contrast, informal organisations, which do not appear on organisational charts, complement formal organisations in achieving organisational goals effectively and efficiently. Informal organisations arise from the personal and social relationships of individuals and are based on personal attitudes, emotions, prejudices, likes, and dislikes. While formal organisations are crucial, they cannot achieve organisational objectives alone. The group’s beliefs and values shape the organisational culture and determine the formal acceptance of authority. Barnard stated that “informal organisation brings cohesiveness to a formal organisation, providing members with a sense of belonging, status, self-respect, and social satisfaction.”
Barnard's Perspectives on Communication and Authority in Organizations
- Communication as the Foundation: Barnard viewed communication as the cornerstone of any organization. Without effective communication, an organization cannot even come into existence. A group of people who can communicate with each other is essential for establishing an organization. Communication is not just about setting up the organization; it is crucial for its smooth functioning.
- Authority as Communication: Barnard believed that authority is also a form of communication. The acceptance of authority depends on how well it is communicated to the subordinates. If subordinates do not understand the orders, they will not be able to follow them. Therefore, communication is the key to the success of an organization.
Features of Communication: Barnard outlined seven essential features of communication within an organization:
- Definite Channels: Communication channels should be clearly defined.
- Awareness of Channels: Everyone should be aware of the communication channels.
- Access to Channels: Everyone should have access to formal communication channels.
- Short and Direct Lines: Communication lines should be as short and direct as possible.
- Competence of Communication Centres: The individuals serving as communication centres should be competent.
- Uninterrupted Communication: Communication lines should not be interrupted during the organization's functioning.
- Authentication of Communication: Every communication should be authenticated.
Complete Communication: Barnard stressed the importance of a complete line of communication. Once a communication channel is decided, all members should be aware of its functioning and details. He also emphasized the need for authentication in communication and the competence of superiors at communication centres.
Concept of Authority: Barnard's views on authority were unique. Unlike classical thinkers who believed that authority comes from the top and rests with the position, Barnard argued that authority depends on the acceptance by subordinates. He viewed authority as a bottom-up approach, flowing from subordinates to seniors. An order has authority based on the person to whom it is addressed, not the person in a position of authority.
Types of Authority: Barnard classified authority into two types:
- Objective Authority: This type of authority arises from the subordinates' willingness to respect their seniors.
- Subjective Authority: This type of authority depends on how the subordinate interprets an order. A subordinate will follow an order if:
- They understand the order.
- The order is consistent with the goals of the organization.
- The order aligns with their personal goals.
- They have the mental and physical capacity to follow the order.
Fiction of Authority:
- Systems thinker Chester Barnard believed that the effectiveness of authority comes from subordinates.
- Barnard viewed authority as a fiction within organizations. He argued that this fiction persists because subordinates prefer not to experience the drawbacks of rejecting orders.
- According to him, subordinates are hesitant to give up their status and benefits within the organization.
- They worry that rejecting orders could result in losing their positions relative to others in the group.
- Barnard noted that subordinates accept authority because it allows them to avoid taking on responsibilities and initiatives.
- As a result, subordinates tend to accept communication from their superiors without questioning it, feeling that the responsibility lies with the superiors.
Rejection of Authority:
- Rejecting authority can be seen as disobedience against the entire organization, which can lead to retaliation.
- This fear helps maintain a connection between workers and the communication from their superiors.
- Instead of genuine authority, a fiction of authority operates within the organization.
- Superiors may believe that subordinates follow their orders because of their authority, while subordinates actually follow orders for their own reasons.
- Barnard observed that this fiction establishes a presumption among individuals that following orders from superiors is acceptable.
- This dynamic allows subordinates to avoid challenging such orders without feeling that their personal status is at risk among their peers.
Contribution-Satisfaction Equilibrium
There is a question about why employees choose to follow their leaders, which relies on their acceptance. According to
Barnard, the survival of an organization hinges on maintaining a balance between the contributions made by its members and the satisfaction they receive in return.
- Contributions: These are what participants provide to the organization, determined not by management, but by the workers themselves.
- Satisfaction: This is what the organization offers its members.
- Member Retention: An individual will stay with the organization only if the benefits they receive are greater than what they contribute.
- Inducements: The organization must have the ability to provide sufficient inducements to keep the system in balance.
Barnard categorized the incentives that motivate individuals to contribute to the organization into two main types:
- Specific Incentives
- General Incentives
Barnard dismissed the traditional view of the economic man and largely agreed with the human relations perspective regarding how people are motivated within organizations. He identified four key sources of satisfaction:
- Material Inducement: This includes money or physical items.
- Non-Material Inducement: This refers to recognition, challenges, prestige, and opportunities to stand out from others.
- Desirable Working Conditions: These are favorable physical environments for work.
- Ideal Benefactions: This involves altruistic motivations, such as serving others or patriotic feelings.
However, Barnard noted that material rewards are not very effective once a person has enough to meet their basic needs.
Question for Functions of the Executive (C.I. Barnard)
Try yourself:
What did Chester Barnard believe is the cornerstone of any organization?Explanation
- Communication is considered the foundation of any organization.
- Chester Barnard emphasized the importance of effective communication for the establishment and smooth functioning of an organization.
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Zone of Indifference
The Acceptance Theory of Authority is supported by the Zone of Indifference for each individual within an organization. Barnard described the Zone of Indifference as a philosophical idea that determines which orders from superiors will be accepted and which will be rejected. According to Barnard, communications that fall clearly within the Zone of Indifference will be accepted by subordinates without hesitation. In contrast, communications that lie outside this zone will be rejected outright by subordinates.
- In relation to the communication that occurs at the edge of this Zone, the subordinate mayor may not agree with the idea.
- Barnard, in this conversation, highlights the importance of expanding the Zone of Indifference for the subordinates.
- He emphasized that higher officials should only share communications that fall within the Zone of Indifference.
- The suggested increase can be achieved through incentives, which can either be monetary or non-monetary, as previously explained in the theory of Contribution-Satisfaction Equilibrium.
Functions of a Leader
According to Barnard, leadership relies on three key elements: the individual, the followers, and the conditions. He believes that not all work done by executives in an organization qualifies as executive work. Barnard categorizes the functions of an executive into three main areas:
- Maintenance of Communication Networks: This involves defining organizational positions, maintaining a personnel system, and preparing organizational charts. It includes specifying duties and dividing work. The personnel system aspect focuses on recruiting qualified individuals and providing incentives.
- Securing Essential Services: This function is about ensuring necessary services from individuals, which can be achieved through maintaining morale, providing education and training, offering incentives, and exercising supervision and control.
- Formulation of Organizational Purposes: Barnard considers this the most crucial function of a leader. It involves setting organizational objectives and purposes that must be widely accepted by all members for genuine cooperation to occur.
Barnard on Decision Making
Barnard contributed significantly to the theory of decision making, emphasizing organizational decision making over individual decision making. He believed that organizational decision making involves deliberation, evaluation, and thought, while individual decision making is influenced by subconscious, responsive, and emotional factors.
He identified five key differences between personal and organizational decisions:
- Organizational decisions are impersonal and focused on organizational ends.
- Organizational goals are explicitly stated, unlike personal goals.
- Organizational ends are reached through logical processes, whereas personal goals may rely on subconscious factors.
- Organizational decisions can be delegated, while personal decisions cannot.
- Organizational decisions are specialized, while personal decisions are not.
- Barnard emphasized the importance of identifying relevant facts that affect organizational purpose and distinguishing them from irrelevant ones. This can be achieved by analyzing situations and identifying strategic factors that influence decision making.
Question for Functions of the Executive (C.I. Barnard)
Try yourself:
Which function of a leader involves setting organizational objectives that must be widely accepted by all members for genuine cooperation to occur?Explanation
- The function of a leader that involves setting organizational objectives for genuine cooperation is the formulation of organizational purposes.
- This function is crucial as it requires the leader to define goals that all members of the organization can align with.
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Conclusion
- Chester Barnard significantly contributed to understanding organizations as a social system and applied the Systems Approach to analyze them.
- His writings stem from his own industry experience, making them practical for real-world application.
- From his direct observations, he introduced unique ideas such as the Fiction of Authority, Zone of Indifference, and Contribution-Satisfaction Equilibrium.
- He shifted away from the Classical Approach, placing authority on the acceptance by subordinates rather than on their organizational positions.
- Barnard rejected the idea of the "economic man" and viewed organizational members as parts of a social system influenced by various physical, biological, and social factors.
- He highlighted the importance of cooperation in achieving organizational goals, emphasizing democratic values in his thinking.
- These insights make his work particularly relevant in today's world.
- This unit covered all the main concepts of Barnard.