Barnard, Chester I.
The Functions of the Executive
Harvard University Press, Boston, 1938
Chester Irving Barnard (1886 – 1961) was an American business executive, public administrator, and the author of pioneering work in management theory and organizational studies.
The functions of the executive derived from the theory of cooperative systems.
Cooperative systems, effectiveness and efficiency, formal and informal organizations, economy of incentives, theory of authority, theory of opportunism, functions of the executive.
Data and Methods:
Theories derived from practical work as executive at NJ Bell Company
Interesting issues and findings:
I – Introduction
• Formal organizationis that kind of cooperation among men that is conscious, deliberate, purposeful
• In our western civilization only one formal organization, the Roman Catholic Church, claims a substantial age.
• Failure to cooperate […] are characteristic afcts of human history
• The survival of an organization depends upon the maintenance of an equilibrium of a complex character in a continous fluctuating environment
II – The individual and the organization
III – Physical and biological limitations in cooperative systems
• Biological limitations: a) application of human energy; b) perception; c) understanding
• Systems of cooperation are never stable, because of changes in the environment and the evolution of new purposes. […] implies special management processes and in complex cooperations, […] executives.
IV – Psychological and social factors in systems of cooperation
• Social factors: a) interactions between individuals within a cooperative system; b) the interation between the individual and the group; c) the individual as the object of cooperative influence; d) social purpose and the effectiveness of cooperation; e) individual motives and cooperative efficiency
V- The principles of cooperative action
• the nature of the joint limitations on cooperation “imposed” by physical, biological, and social factors; 2) the processes of overcoming those limitations in purposive conduct; 3) their bearing on effectiveness of ccoperative effort; 4) their bearing on the efficiency of cooperative effort.
VI – The definition of formal organization
• Cooperative situations can be : related to aspects of a) physical environment; b) social environment; c) individuals ; d) other variables
• Definition of formal organization: A system of consciously coordinated activities or forces of two or more persons
VII – The theory of formal organisation
• Organization when: 1) there are persons able to communicate to each other; 2) who are willing to contribute action 3) to accomplish a common purpose.
• External equilibrium has two terms in it: 1) the effectiveness of the organization and 2) its efficiency, which comprises the interchange between the organization and individuals.
• Willingness to communicate ; 2) Common purpose ; 3) Communication
• Effectiveness: ability to carry out its purpose, it is primarily a matter of technological processes. Paradox: an organization must disintegrate if it cannot accomplish its purpose. It also destroys itself by accomplishing its purpose.
• Efficiency: securing of nefcessary contributions to the cooperative system
VIII – The structure of formal organizations
• Complete, incomplete, subordinate and dependent organizations
• Origins: a) spontaneous; b) direct individual’s effort ; c) infant bodies from existing ; d) result of segmentation of existing ones.
• Necessity of a leader: a) complexity of purpose; b) difficulty of communication process; c) extent to which communication is necessary; d) complexity of the personal relationships involved.
IX – Informal organizations and their relation to formal organizations
• “By informal organization I mean the aggregate of the personal contacts and interactions and the associated groupings of people […] joint purposes are excluded by definition, common or joint results of important character nevertheless come from such organization.
• Effects: a) it establishes certain attitudes, understandings, customs b) it creates the condition under which formal organization may arise
• “comradeship is more powerful than patriotism”
• Formal organizations create and require informal organizations.
• Functions of informal in formal organizations: 1) communication; 2) maintenance of cohesiveness 3) maintenance of the feeling of personal integrity, self-respect, of independent choice.
X – The bases and kinds of specializations
• Associational specialization: repeated mutual adjustment of persons to persons.
• “The effectiveness of coopeartive systems depends almost entirely upon the invention or adoption of innovations of specialization”
• “The primary aspect of specialization is the analysis of purpose”
• “organization and specialization are synonyms”: the correlation is accomplished by analyzing purpose into parts or detailed purposes or ends.
XI – The economy of incentives
• “The egoistical motives of self-preservation and self-satisfaction are dominating forces”
• The method of incentives (offering objective incentives)
• The method of persuasion (changing subjective attitudes): a) coercitive conditions; b) rationalization of opportunity; c) inclucation of motives.
XII – The theory of authority
• “Authority is the character of a communication (order) in a formal organization by virtue of which it is accepted by a contributor to or member of the organization as governig the action he contributes”
• Authority involves two aspects: 1) the subjective and 2) the objective
• “There exists a zone of indifference in each individual within which orders are acceptable without conscious questioning of their authority.”
• Authotity of position // authority of leaderhsip
• There cannot be authority without corresponding responsibility
• A) Channels of communication should be definitely known; b) objective authority requires a definite formal channel of communication to evey memmber of the organisation; c) the line of communication must be as direct or short as possible; d) the complete line of communication should be usually be used; e) the competence of the persons serving as communication centers, that is, officers, supervisory heads, must be adequate; f) the line of communication should not be interrupted during the time when the organization is to function.; g) every communication should be authentificated.
XIII – The environment of decision
• […] a sort of dual personality is required of individuals […] – the private personality, and the organization personality (can not be delegated, technique of decision)
• Executives […] represent a specialization of the process of making decisions. […] are under the obligation of making decisions.
• Decisions originate: a) from authoritative communications from superiors; b) from cases referred for decision by subordinates ; c) […] iniciative of the executive
• […] most decisions produce no direct evidence […] and can only be derived from the cumulation of indirect evidence.
• The decision may be not to be decided (not pertinent, lacking data, prematurely, cannot made effective others should take)
• The fine art of executive decision consists in not deciding questions
XIV – The theory of opportunism
• Moral element is indispensable (existing purpose and an objective environment). Its antithesis is the opportunistic element, that is indispensable to the theory of organization. Action takes place in the present under present conditions and means.
• “The limiting (strategic) factor is the one whose control, in the right form, at the right place, and time, will establish a new system or set of conditions which meets the purpose. (vs complementary factors)
• “This is the meaning of effective decision – the control of the changeable strategic factors, that is, the execercise of control at the rigth time, right placce, right amount and ritgh form so that purpose is properly redefined and accomplished”.
• “Decision relates to action.[…] Purpose will have to be redefined in practical terms.
• “The unbalance in the discrimination of the facts of the environment is added the confusion of the past with present environments.”
• “Purpose is the bridge between the past and the future which functions only as it rests upon the present.”
• “The direct environment of the executive decision is primarily the internal environment of the organization itself”[…]” It is the organization, not the executive, which does the work on the external environment”.
XV – The Executive Functions
• Points of interconnection = executives
• “…executive functions the specialized work of maintaining systems of cooperative effort”
• “It is not even quite correct to say that the executive functions are to manage the system of cooperative efforts”
• Essential executives functions: 1) to provide the system of communication [executive personnel and executive positions] ; 2) to promote the securing of essential efforts ; 3) formulate and define purpose
XVI – The Executive Process
• Art rather than science
• Known by its effects rather than by analysis
• An organization is a system of cooperative human activities the functions of which are: 1) the creation 2) the transformation and 3) the exchange of utilities. It embraces 4 different kind fo economies: a) material economy, b) a social economy, c) the individual economies, and d) the organization economy.
• This philosophy of giving as little as possible and getting as much as possible in the other man’s values is the root of bad customer relations, bad labor relations, bad credit relations, bad supply relations, bad technology.
• The reward of service is more service
XVII – The Nature of the Executive Responsibility
• […] the moral factor […] spell the necessity of leadership, the power of the individuals to inspire cooperative personal decision by creating faith […]
• Cooperation, not leadership, is the creative process; but leadership is the indispensable fulminator of its forces.
• Leadership has two aspects 1) local, individual, ephemeral 2) responsible
• The point is that responsibility is the property of an individual by which whatever morality exists in him becomes effective in conduct.
• If morality to which the responsibility relates is low, the organizations are short-lived.
XVIII – Conclusion
• “I believe that the expansion of cooperation and the development of the individual are mutually dependent realities, and that a due proportion or balance between them is a necessary condition to human welfare.”
Interesting personal discussion points:
– Barnard, even from the fact that is a practitioner, theorizes about multiple topics on management. Why so many? As a general manager, he dealed with all the different aspects of management as he said “the higher the positions in the line of authority, the more general the abilities required”. He then wanted to make a complete study of management, not only specific aspects.
– Without mentioning the current common names of the domains, he writes about strategy, human resources (ie selection, incentives), OB (ie. informal communication), structure, leadership, motivation (related to his concept of efficiency), social corporate responsibility (executive responsibility)
– strategic management (about concepts mission/ vision that he calls purpose): p137 “Understanding or acceptance of the general purpose of the complex is not, however, essential”. This idea is in confrontation with current ideas of well-defined and accepted mission/vision.
– Barnard wants to explain the main characteristics of organizations, not only commercial, but also religious, social and political. This helps him to analyze common aspects and at the same time, differentiate them.
– I used to be an executive. As an executive, I would be attracted by this book (first by its title, second the author’s background) but would expect a more practical approach and would be surprised by the lack of illustrative examples and abstract theories.