Chester Barnard’s Theory of Organization views organizations as cooperative, evolving social systems, emphasizing effective communication, consent-based authority, and a balance between employee contributions and inducements for success.
Introduction
In 1938, Chester Barnard, a prominent figure in the world of organizational theory, unveiled his groundbreaking insights in his book ‘The Functions of Executive.’ Drawing from his own experiences as an executive at the iconic Jerray Bell Telephone company, Chester Barnard articulated a theory of organization that transcends time. He envisioned organizations as dynamic, evolving social systems and provided invaluable guidance for executives to navigate the complexities of managing them effectively. He is also regarded as the “father of the Social System school of administration”. Some of his other important works are “Organization and management” (1948) and “Elementary Conditions of Business Morals”.
In this article, we will delve into the key principles of Chester Barnard’s theory of organization and explore how they continue to shape modern management practices.
Table of Contents
Organization as an Organic and Cooperative System
At the core of Chester Barnard’s theory lies the concept of an organization as an organic and evolving social system. He believed that cooperation was the lifeblood of any successful organization. In a world where individuals have their own limitations, both physical and social, cooperation becomes the essential ingredient that allows individuals to overcome these limitations. This cooperation, according to Chester Barnard, not only benefits the employees but also contributes to the overall success of the organization. Chester Barnard defined “organization as a system of Consciously Coordinated activities or forces of two or more persons”.
Formal and Informal Organization
Chester Barnard emphasized the importance of both formal and informal means of communication within an organization. He saw these two forms as complementary rather than opposing forces. Executives were advised to strike a balance between the two, recognizing that each served a distinct purpose. This balanced approach to communication is a timeless lesson for modern leaders seeking to foster effective communication in their organizations.
Theory of Leadership
Chester Barnard defines leadership as, “the power of individuals to inspire cooperative decisions by creating faith”. He refers to it as the quality of behavior of individuals where they guide people or their activities in organized effort.
Five qualities of a leader that are:
1) Vitality and Endurance
2) Decisiveness
3) Persuasiveness
4) Responsibility
5) Intellectual capacity
Four Functions of a leader –
- The determination of Objectives
- The manipulation of means
- The control of the instrumentality of resources
- The simulation of Coordinated Action
In addition to managerial responsibilities, Chester Barnard reminded executives of their moral duty. He believed that a strong moral standing was vital for the smooth functioning of an organization. In a world where ethical considerations continue to gain prominence, Barnard’s call for moral responsibility remains relevant.
Consent Theory of Authority
One of Chester Barnard’s pioneering ideas was the “Consent Theory of Authority” or “Accepted Authority.” He proposed that the effectiveness of authority within an organization hinges on the willingness of subordinates to carry out orders. To gain this consent, Barnard identified four essential preconditions:
- Communication
- Conformity to the organization’s purpose
- Compatibility with personal interests,
- The ability to comply physically and mentally.
Executives were entrusted with the responsibility of issuing only those orders that were acceptable to their subordinates i.e. “Authority comes from the bottom”.
Chester Barnard also introduced the concept of the “zone of indifference” – a zone where employees unquestioningly accept authority. Recognizing that this zone could shift, he urged executives to identify and maintain it through proper inducement packages.
Inducement-Contribution Balance
Chester Barnard underscored the importance of maintaining a delicate equilibrium between the contributions expected from employees and the inducements or incentives provided to them. This balance is crucial to keep employees motivated and committed to the organization’s goals. Today’s leaders can learn from Chester Barnard’s wisdom by ensuring that their employees feel adequately rewarded for their efforts.
Effective Communication
Barnard recognized that effective communication was the linchpin of organizational success. To this end, he formulated three principles:
- Everyone in the organization must know the channels of communication.
- Everyone must have access to a formal communication channel.
- Communication lines should be kept short and direct.
According to Chester Barnard, Feedback is the first principle of Communication.
Conclusion
Chester Barnard’s theory of organization, developed over eight decades ago, remains a source of timeless wisdom for today’s executives and leaders. His insights into the organic nature of organizations, the significance of cooperation, and the nuances of effective communication provide a solid foundation for navigating the challenges of modern management. By embracing Barnard’s principles, organizations can aspire to not only survive but thrive in the ever-evolving business landscape.
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