Explain Chester Barnard’s theory.

Chester Barnard (1886-1961) worked for AT&T for 40 years. In 1931, he was asked to organize and direct the New Jersey Emergency Relief Administration. Barnard also spent time teaching a series of lectures at Harvard in 1937, which served as the basis of his only book, entitled The Functions of the Executive (1938).

Natural Systems Theory Of Organizations

General Framework

Barnard viewed organizations as cooperative systems, which he defined as 'a complex of physical, biological, personal and social components which are in a specific systematic relationship by reason of the cooperation of two or more persons for at least one definite end.' Basically, according to Barnard, we enter into cooperative arrangements to accomplish things we cannot do alone.

He viewed organizations in biological terms as akin to living organism that seek to survive in a hostile environment. Similarly, he recognized that an organization is not self-sufficient, but needs to rely upon resources from the outside environment that allow it to function and also limits an organization's actions. For example, an organization needs capital, labor, equipment, and resources to function and accomplish its goals. On the other hand, science and technologies are resources in the environment that can be tapped by an organization, but also limit what it can accomplish. We can't achieve a goal that is outside the laws of physics, for example.

According to Barnard, an organization needs to achieve system equilibrium. In the context of his theory, achieving equilibrium involves two interrelated processes. The first process relates to the equilibrium between the organization's characteristics and its external environment. The second process tries to balance the contributions that members of the organization make to the organization's collective purpose and the degree of satisfaction both the organization and members receive in the exchange.

Inducement of Members

The Inducement-Contribution Theory is not nearly as complicated as it may seem. At its most basic level, it's simply a theory of motivation. The theory holds that an organizational member will make contributions in exchange for inducements. The member continues to engage in the exchange so long as the inducements received are higher than the contributions a person is asked to make. Now, all this really boils down to the fact that an employee will continue to work for the organization if it is worth his while. If the pay, benefits and job satisfaction are greater that the perceived cost of your work provided to the organization, you will stay and continue to contribute.

Remember that Barnard viewed an organization as a cooperative system. He described two ways to induce such cooperation. The first method is by offering incentives to members that satisfy their existing motivations, such as money, and is called the incentive method. A second method is to alter a member's motive and is called the persuasive method.

There are three means of persuasion: coercion, propaganda, and inoculation of motives. Coercion occurs where a member is persuaded to cooperate through a threat, such as termination or withholding of benefits. Propaganda occurs when a member is persuaded by the importance of the organization's mission, service or product. Finally, inoculation involves educating members in certain values such as religious beliefs, patriotism, or professional values so they act in accordance with those values.

Organizational Authority

There are limits to authority. According to Barnard, directives, rules, regulations, and orders from the organization must be considered legitimate or they will not be effective. Four factors must be satisfied for compliance of orders through legitimacy of authority:

1.        The member must understand the order.

2.        The member must believe it is consistent with the organization's mission.

3.        It must be compatible with the member's personal interests.

4.        The member must be able to comply with the order both mentally and physically.

Executive Functions

Barnard also discusses the role of an executive. The primary function of the executive is to maintain the organization in a state of internal and external equilibrium. Remember that equilibrium is just a fancy word for balance. Here, we are talking about a balance between the internal and external factors effecting the organizations such as resources, labor, market conditions, and investments.

Executives serve three basic functions in maintaining the cooperative system:

·         First, they must maintain and develop a system of communication.

·         Second, they must induce individuals to join the organization and contribute to its mission.

·         Finally, and perhaps most importantly, they must define the purpose and objectives of the organization.

Values & Morality

Let's discuss one final aspect of Barnard's theory. He viewed organizations as moral in nature. An organization will develop its own set of moral codes and values, which will reflect its expectations and behavioral norms. Since everyone has different morals and values, an organization seeks to establish the superiority of its code over each member's personal code.

Summary

Barnard developed a theory of organization around the idea that it is a natural, cooperative system. Important aspects of his natural system theory include the inducements-contribution theory, altering the motives of members to obtain cooperation, and recognition of the need for legitimate authority. Moreover, he described the primary function of an executive as maintaining the cooperative system in a state of external and internal equilibrium. Finally, he believed that an organizational code of morality should override individual members' personal codes.