Chester Irving Barnard was an American business executive, public administrator, and the author of pioneering work in management theory and organizational studies. His landmark 1938 book, The Functions of the Executive, sets out a theory of organization and of the functions of executives in organizations. The book has been widely assigned in university courses in management theory and organizational sociology. Barnard viewed organizations as systems of cooperation of human activity, and noted that they are typically short-lived. According to Barnard, organizations are generally not long-lived because they do not meet the two criteria necessary for survival: effectiveness and efficiency.
Barnard viewed organizations as systems of cooperation of human activity, and noted that they are typically short-lived. It is rare for a firm to last more than a century. Similarly most nations last for less than a century. The only organization that can claim a substantial age is the Roman Catholic Church. According to Barnard, organizations are not long-lived because they do not meet the two criteria necessary for survival: effectiveness and efficiency. Effectiveness, is defined the usual way: as being able to accomplish stated goals. In contrast, Barnard's meaning of organizational efficiency differed substantially from the conventional use of the word. He defined 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 members while attaining its explicit goals, cooperation among its members will last. Barnard was a great admirer of Talcott Parsons and he and Parsons corresponded persistently. The two scholars would send manuscripts for commentary to each other and they would write long letters where they engage in a common theoretical discussion. The first correspondence between Barnard and Parsons began in the end of the 1930s and it persisted essentially to Barnard’s death in 1961.
The Functions of the Executive
Barnard's classic 1938 book, The Functions of the Executive discusses, as the title suggests, the functions of the executive, but not from a merely intuitive point of view, but instead deriving them from his conception of cooperative systems. Barnard summarized the functions of the executive as follows:
Establishing and maintaining a system of communication;
Securing essential services from other members;
Formulating organizational purposes and objectives.
Barnard formulated two interesting theories: one of authority and the other of incentives. Both are seen in the context of a communication system grounded 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;
Competence of persons serving as communication centers should be adequate;
The line of communication should not be interrupted when the organization is functioning;
Every communication should be authenticated.
Thus, what makes a communication authoritative, rests with the subordinate, rather than with his superior. Barnard's perspective had affinities to that of Mary Parker Follett and was very unusual for his time, and that has remained the case down to the present day. He seemed to argue that managers should obtain authority by treating subordinates with respect and competence. As for incentives, he proposed two ways of convincing subordinates to cooperate: tangible incentives and persuasion. Barnard gives great importance to persuasion, much more than to economic incentives. He described four general, and four specific incentives. The specific incentives were:
Money and other material inducements;
Personal non-material opportunities for distinction;
