Chester Barnard

1. In The Functions of the Executive Barnard begins with the question: Why have organizations?
# His answer is, to accomplish things that individuals cannot accomplish alone.
2. What does organization require?
# Cooperation
# Coordination
3. What is required to secure cooperation?
# Common purpose
# Incentives - which exist in many forms: i) material; ii) prestige; iii) power; iv) working
conditions; v) pride/pleasure in work; vi) preservation of some customary and valued
working environment; vi) pleasure of participation.
# Reinforce incentives with persuasion: i) intimidation or coercion; ii) “the rationalization
of opportunity and inculcation of motives”.
4. The emphasis on incentives and persuasion reflects Barnard’s assumption that cooperation is
problematic (even in a buyers’ labour market).
5. To address the problems of securing cooperation ...
# reduce need for persuasion through careful selection;
# generate incentives through growth (consider Simon’s model of executive compensation).
6. There are prerequisites for cooperation, incentives, and persuasion:
# a principle of distribution;
# distributable resources;
# an infrastructure, including buildings and a communication system; other organizations
7. Cooperation should be productive. There are two measures of this:
# effectiveness - the accomplishment of recognized objectives, a method for renewing
objectives;
# efficiency - “the efficiency of the organization is its capacity to offer effective
inducements to maintain the equilibrium of the system”.
8. Effective cooperation requires:
# a system of communication;
# which requires hierarchy;
# and specialization on the basis of one or more of the following: i) location, ii) time/shifts,
iii) work groups, iv) things on which work is done - e.g., chassis, engine, electric system;
iv) process - e.g. heating steel, rolling steel, finishing steel, etc.
9. Hierarchy involves authority.
# Authority rests in the subordinate.
# It depends on effective communications.
# It requires that position and expertise coincide.
# It’s margins are determined by a zone of indifference - the range within which
instructions are accepted - not contested.
10. Along with formal organization there is also informal organization (contacts outside of those
prescribed by the organization, states of mind that develop out of those contacts). Informal
organization can either:
# improve performance by i) facilitating communication; ii) maintain cohesiveness; iii)
support feelings of personal integrity, self-respect, independent choice;
# or it can have negative effects (a basis for union organizing).