CHESTER BARNARD

(Theory of Organization and Authority)

A project report submitted in partial fulfillment of the course Public Administration for the
requirement of degree of B.A., LL.B (Honrs.) for the Academic Session 2020-21

Public Administration

Researched & Submitted : Asession and Supervision :

Andlib Imrose Prof. Dr. S.P Singh

B.A., LL.B (Honrs.) Faculty: Public Adminstration

3rd Year, 5th Semester

Roll no. 1915

CHANAKYA NATIONAL LAW UNIVERSITY

CHESTER BARNARD

ACKNOWLEDGEMENT

Writing a project is one of the most significant academic challenges, I have ever faced. Though
this project has been presented by me but there are many people who remained in veil, who gave
their all support and helped me to complete this project.

First of all I am very grateful to my subject teacher Prof. Dr. S.P Singh the kind support and
help of whom the completion of the project was a herculean task for me. He donated his valuable
time from his busy schedule to help me to complete this project and suggested me from where
and how to collect data.

I acknowledge my friends who gave their valuable and meticulous advice which was very useful
and could not be ignored in writing the project.

Last but not the least, I am very much thankful to my parents and family, who always stand
aside me and helped me a lot in accessing all sorts of resources.

I thank all of them!

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CHESTER BARNARD

DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A., LL.B (Honrs.)
Project Report entitle “Chester Barnard, Theory of Organization and Authority” Submitted
at Chanakya National Law University, Patna is an authentic record of my work carried out under
the supervision of Prof. Dr. S.P Singh. I have not submitted this work elsewhere for any other
degree or diploma. I am fully responsible for the contents of my Project Report.

(Signature of the Candidate)

Andlib Imrose

Chanakya National Law University, Patna

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CHESTER BARNARD

TABLE OF CONTENTS
1. Introduction..................................................................................................................................5
1.1 Aims and Objective................................................................................................................6
1.2 Research Question..................................................................................................................6
1.3 Research Methodology..........................................................................................................6
1.4 Limitation...............................................................................................................................6
2. Definition of Organization...........................................................................................................7
3. Classification of Organization.....................................................................................................9
3.1 Formal Organization..............................................................................................................9
3.2 Informal Organization..........................................................................................................10
4. Theory of Authority...................................................................................................................12
4.1 Zone of Indifference.............................................................................................................13
4.2 The Fiction of Authority......................................................................................................14
4.3 Responsibility.......................................................................................................................15
4.4 Decision-Making..................................................................................................................16
5. The Executive Functions...........................................................................................................17
6. Leadership & Organisational Science.......................................................................................20
7. Conclusion, Criticism and Suggestion.......................................................................................21
Bibliography..................................................................................................................................23
Books.........................................................................................................................................23
References..................................................................................................................................23

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CHESTER BARNARD

1. Introduction
Chester Barnard, a business executive, public administrator and author of management and
organization theories, is one of the very few administrative theorists who propounded
management and organizational theories and principles based on personal experience. He is
considered the spiritual father of the ‘social system’ school, which influenced many
organisational thinkers of the last century1. His outstanding classic ‘The Functions of the
Executive’, was based on a series of lectures he gave on administration at the Lowell
Institute at Boston and is a compulsory reading in all public administration, management
and organisation studies across the globe. As Bertram Gross noted, Barnard is one of the few
theorists in modern administrative thought who was highly successful as a man of affairs and
also as a theoretician2.Chester Irving Barnad born at Malden, Massachusetts, USA in a family of
modest means, had to work very hard for his livelihood. He joined as an apprentice to a piano
tuner and while working he prepared for the pre-school and joined the prestigious Mount
Herman School. In 1906, he joined Harvard and majored in economics and government. Though
he successfully completed his studies by 1909, he failed to obtain a degree on technical grounds
because of lack of training in science and his inability to master chemistry 3. To support his
studies financially he undertook diverse tasks like typing, conducting dance orchestra, etc. In
1909, he joined as a statistician with the Bell Telephone Company and was promoted as a
Commercial manager in 1915. In 1922, he became Assistant Vice-president and General
Manager of the Bell Telephone Company at Pennsylvania and was promoted as Vice-president
of the company after four years. In 1928, he became President of the Bell Telephone Company
of New Jersey at the age of forty-one and continued until 1948. Barnard spent considerable time
in understanding and analysing management. Oliver Sheldon, Elton Mayo, M.P. Follett, etc.,
inspired his thinkings. While being an active manager, he taught in various universities in United
States and published books on management. His The Functions of the Executive brought him
fame and continues to be the most thought provoking book on organisation and management
ever written by a practicing executive. It is the direct outcome of Barnard’s failure to find an

1
Gvishiani, D., Organisation and Management: A Sociological Analysis of Western Theories, Moscow, Progress
Publishers, 1972, p. 38.
2
Gross, Bertram M., The Managing of Organisations: The Administrative Struggle, Vol. 1, New York, The Free
Press of Glencoe, 1964, p. 171
3
An Introduction to Chester I. Barnard and His Theories of Organisation and Management, Ithaca, N.Y. New York
State School of Industrial and Labor Relations, Cornell University,1974

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CHESTER BARNARD

adequate explanation of his own executive experience in classic organisations or economic

theory. The Functions reflects Barnard’s wide readings in psychology, sociology, social
psychology, economics, anthropology, law, political theory and philosophy of science. 4The
reasons for the endurance of Barnard’s thought, according to Andrews, is his stamina in abstract
thought, his capacity to apply reason for professional experiences, and his probable sensitivity
and expertness in practice. The impact of Barnard’s thought is considerable both on theory and
practice of management and has inspired a number of outstanding thinkers like Simon. As
Mahoney noted that Barnard combines two cultures – the science of organisation and the art of
organising and his book was written for posterity.5

1.1 Aims and Objective

 To throw light on life and work of Chester Bernard
 To know about the classification of Organization
 To know about how a organization work

1.2 Research Question

 How Chester Bernard define Organization?
 What are features of Formal and Informal Organization and how they are
complementary to each other?
 How the Authority is accepted any Organization?
 What is the function of Fiction of Authority?
 What is the significance of Leadership in any Organization?

1.3 Research Methodology

Doctrinal method of research has been utilized to complete the project. Few primary and
secondary methods were used. Some literary works and books and articles were referred and the
internet through various websites was used extensively for the collection of data which was
required for the study needed for this research.

1.4 Limitation
There was limited access to data. The time available to study research problem and to measure
change over time is constrained by the deadline of the assignment.

4
Barnard, Chester I., The Functions of the Executive, op.cit., p. x.
5
Mahoney, Joseph T., op.cit., p.160.

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2. Definition of Organization
Rejecting the old definitions of organisation as emphasising membership, Barnard defines
organisation as a system of consciously coordinated activities or forces of two or more
persons6. In this definition, he emphasises the system of interactions. It is a system composed of
the activities of human beings, a system in which the whole is always greater than the sum of its
parts and each part is related to every other part in some significant way. As a system, it is held
together by some common purpose by the willingness of certain people to contribute to the
operation of the organisation, and by the ability of such people to communicate with each
other7. Raising the question as to why an individual should contribute his activities to the
8
operations of any organisation, Barnard strongly disapproves the concept of economic man
and propounds the theory of contribution-satisfaction equilibrium. Contributions, which may be
regarded in terms of organisation as activities, are possible only when it is advantageous to
individuals in terms of personal satisfaction. Barnard says that if each person gets back only what
he puts in, there is no incentive, that is, no net satisfaction for him in cooperation. What he gets
back must give him advantage in terms of satisfaction; which almost always means return in a
different form from what he contributes9.The satisfaction which an individual receives in
exchange for his contribution may be regarded from the view of organisation as inducement or
incentive. Barnard, while rejecting the viewpoint that man is mainly motivated by economic
incentives, analyses the multiplicity of satisfactions and identifies four specific inducements.
They are:

 material inducements such as money, things or physical conditions;

 personal non-material opportunities for distinction, prestige and personal power;
desirable physical conditions of work; and
 ideal benefactions, such as the pride of workmanship, sense of adequacy, altruistic
service for family or others, loyalty to organisation in patriotism.

Barnard also mentions four types of ‘general incentives’. They are:

6
Barnard, Chester I., The Functions of the Executive, op.cit., p. 72-73.
7
Mahoney, Joseph T., op.cit., p.160.
8
Barnard, Chester I., Organisation and Management, op. cit., p.15.
9
Barnard, Chester I., The Functions of the Executive, op.cit., p. x

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CHESTER BARNARD

 associational attractiveness based upon compatibility with associates; • adoption of

working conditions to habitual methods and attitudes;
 opportunity for the feeling of enlarged participation in the course of events; and
 conditions of communicating with others, a condition based on personal comfort in
social relations and the opportunity for comradeship and for mutual support in personal
attitudes.

In discussing the relationship between the specific inducements, Barnard maintains that
economic rewards are ineffective beyond the subsistence level. He also says that the inducements
cannot be applied mechanically, and their proportion depends on particular situations, time and
individuals. The arrangement of inducements is a dynamic process, requiring experiences and
imagination. Barnard feels that the primary function of the executive is to handle the economy of
incentives within an organisation.

3. Classification of Organization
3.1 Formal Organization
Organisation comes into existence only when
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(a) There are persons able to communicate with each other,

(b) Who are willing to contribute action,

(c) To accomplish a common purpose.

Thus communications, willingness to serve and common purpose are the three elements in
a formal organisation. There can be no organisation without persons. More than the persons
their services or acts should be treated as constituting an organisation. Willingness can be
expressed in terms of loyalty, solidarity and strength of organisation. It implies, surrender of
personal conduct and depersonalisation of personal action.

Barnard maintains that in a modern society “the contributors to an organisation always are only a
small minority actually having positive willingness,” and a majority is negative in their
commitment. More importantly, the commitment of individuals always fluctuates, thereby
creating unstable conditions in organisations. Willingness, positive or negative, is the expression
of the net satisfaction or dissatisfaction experienced by each individual. From the viewpoint of
the individual, willingness may be the joint effect of personal desires and reluctance and from the
point of organisation, it is the joint effect of the objective inducements offered and the burdens
imposed.

For cooperation, there must always be an objective or ‘purpose’. The necessity to have a purpose
is axiomatic, implicit in the words “system, coordination, and cooperation”. The purpose need
not always be specific; sometimes it can be inferred. Unless a purpose is accepted by all those
whose efforts constitute the organisation, it will not stimulate cooperative action. To Barnard, an
objective purpose that can serve as the basis for a cooperative system is the one that is believed
by the contributors to be the determined purpose of the organisation. 10Barnard identifies four
characteristics of formal organisations viz., systems, depersonalisation, specialisation and
informal organisations.11 In organisations the efforts of the individuals are ‘depersonalised’ in
that they are determined by the organisations than the individual. Specialisation is another

10
Mahoney, Joseph T., “The Relevance of Chester I. Barnard’s Teachings to Contemporary Management Education:
Communicating the Aesthetics of Management”, International Journal of Organisation Theory & Behaviour, Vol.5,
No. 1&2, 2002, p.162.
11
https://www.accountingnotes.net/organizations/organisational-structure/formal-and-informal-organisation/17640
(18th September 2020, 5:00 pm)

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characteristic and in this Barnard’s analysis is more or less on the lines of Gulick’s analysis of
four bases of purpose, process, personnel and place. 12 And lastly, Barnard argues that in all
complex orgnisations there exists an informal organisation. The formal organisations as systems
are part of a wider social system with interdependencies with dynamic changes and the
organisations are more than the sum of its constituent parts. 13

3.2 Informal Organization

Individuals in the organisation continuously interact based on their personal relationships rather
than the organisational purpose. Such interaction may be due to the gregarious instinct or
fulfillment of some personal desire. Because of the continuous nature of interactions, relations
become systematised and they result into what are called ‘informal organisations’. Barnard
describes informal organisations as the aggregate of personal contacts and interactions and
the associated grouping of people. An informal organisation, to be effective, must always
establish formal organisations within it. In turn, formal organisation creates informal
organisations as a means of communication and to protect the individuals from the domination of
the formal organisation. In Barnard’s word, “they are interdependent aspects of the same
phenomenon - a society is structured by formal organisations, formal organisations are vitalised
and conditioned by informal organisations”14. What is asserted is that there cannot be one
without the other. If one organisation fails, the other will necessarily disintegrate. Many
executives with ample experience either deny or neglect the existence of the informal
organisation within their own formal organisation. This may be due to their pre-occupation with
the problems of the formal organisation or reluctance to accept the existence of what is difficult
to define or describe. It may be noted that the organisations are quite unaware of the widespread
influences, attitudes and agitation within their own organisations. To Barnard, one cannot
understand an organisation from the organisation chart or its rules and regulations or not even by
watching its personnel. It is important to learn the organisation ropes - “in organisation - that is
chiefly learning who’s who, what’s what and why’s why of its informal society”. Barnard
considers communication, maintenance of cohesiveness through regulating the willingness to
learn and the ability of the objective authority, and maintenance of the feeling of personal

12
http://www.ddegjust.ac.in/studymaterial/mcom/mc-101.pdf (18th September 2020, 6:00 pm)
13
https://www.researchgate.net/publication/316283969_Systems_theory ( 18th September 2020, 7:00 pm)
14
Barnard, Chester I., The Functions of the Executive, op. cit. p. 120.

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integrity, self-respect and independent choice are the functions of informal organisations. 15
Barnard feels that informal organisations should not be viewed as avoidable evil and asserts that
where they do not exist, they need to be created as they perform a number of functions to sustain
the formal organisations.

http://epgp.inflibnet.ac.in/epgpdata/uploads/epgp_content/S000030PU/P001502/M016164/ET/146536953011.ET.
15

Chester_Barnard-Marina_Pinto.pdf (20th September 2020, 7:00 pm)

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4. Theory of Authority
Barnard’s conceptualisation of authority is most significant. He did not agree with the traditional
concept of authority and introduces ‘acceptance’ as the basis of authority. He defines the
authority as “the character of a communication (order) in a formal organisation by virtue
of which it is accepted by a contributor to, or ‘member’ of, the organisation as governing
the action he contributes; that is as determining what he does or is not to do so far as the
16
organisation is concerned”. This definition has both subjective and objective aspects. The
former implies acceptance of a communication as authority. The latter is concerned with the
character in the communication by virtue of which it is accepted.

The individuals in the organisation accept authority only when the following four conditions
obtain simultaneously17:

(a) When the communication is understood: Unless the communications are intelligible, they
cannot be understood and in consequence have no authority. Orders issued in general terms
encounter problems of interpretation, and implementation. As most communications in
organisations are general and unintelligible, Barnard says, most of the time is spent in
interpretation and reinterpretation of orders to concrete situations.

(b) Consistency with the organisational purpose: Any communication, not compatible with the
purpose of the organisation, is unlikely to be accepted. Because of the cross purposes, it may
result in frustrated action. An intelligent person will deny authority if he understands that it is a
contradiction with the purposes of the organisation. Any apparent conflict has to be explained,
otherwise, orders are not likely to be executed.

(c) Compatibility with personal interests: If the communications are detrimental to the personal
interests of the individuals, they have little chance of being accepted. Similarly, the orders should
also provide positive inducements to the individual to motivate them. Or else the orders would be
disobeyed or evaded as inconsistent with personal interest. The case of voluntary resignations
from organisations can be explained on this basis.

16
https://archive.org/stream/KeyTerms/Administrative%20Thinkers%20-%20Prasad%20and%20Prasad%20-
%20Pub%20Ad%20Optional_djvu.txt ( 20th September 2020, 9: 00 pm)
17
Barnard, Chester I., Organisation and Management, op. cit., p.15.

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(d) Physical and mental ability to comply: In cases where a person is unable to comply with an
order, it will generally be disobeyed or disregarded. Therefore, orders should not be beyond the
mental and physical capacity of the individuals.

From the foregoing, it is evident that the determination of authority lies with the subordinate.
Then question is how to ensure enduring cooperation of an individual in an organisation.
According to Barnard, it is possible under three conditions:

(a) when the orders issued in organisations are in accordance with the four conditions discussed
above;

(b) when the orders fall within the ‘zone of indifference’; and

(c) when the group influences the individual resulting in the stability of the zone of indifference.

4.1 Zone of Indifference

The acceptance of authority in organisations, as noted, depends on the zone of indifference. 18 If
the orders are arranged in order of their acceptability to the person affected, they fall into three
different categories, viz.,

(a) Those which will clearly be unacceptable and not obeyed,

(b) Those which are on neutral line i.e., either just acceptable or just unacceptable, and

(c) Those which are unquestionably acceptable.

Orders, which fall under the last category, come within the ‘zone of indifference’. As long
as the orders fall within this ‘zone’, they will be accepted by the individuals unmindful of
the nature of authority. The zone of indifference will vary depending upon the inducements
offered and the burdens and sacrifices made by the individuals in the organisation. It is clear that
when the inducements are not adequate, the range of orders that will be accepted will be limited.
The executives in the organisation should be conscious of the ‘zone’ and issue only those orders,
which fall within the ‘zone’. To do otherwise would be to open themselves to the charge that
they do not know how to use authority or are abusing it.

https://thebusinessprofessor.com/lesson/acceptance-theory-of-authority-definition (23rd September 2020, 8:00

18

pm)

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4.2 The Fiction of Authority

The fiction of authority establishes the presumption that individual accepts orders from superiors
because they want to avoid making issue of such orders and avoid incurring personal
subservience or loss of personal status with their colleagues. The contributors accept the
authority of communication, as care is taken to see only acceptable communications are issued;
most of them fall within the zone of personal indifference and the communal sense influences the
motives of the contributors. The fiction of superior authority appears to be necessary for two
reasons. Firstly, the fiction of authority enables the individual to delegate upward or to the
organisation, responsibility for what is an organisation decision. Most persons obey
authority because they dislike the personal responsibility when they are not in a position to
accept it. The difficulties in the operation of the organisation lie in the reluctance of the
individuals to take the responsibility for their own actions in organisation, and not in the
excessive desire of individuals to assume responsibility for organisational action. Secondly, the
fiction drives home the point that what is at stake is the good of the organisation.
Disobeying authority for arbitrary reasons and twisting organisational requirements for personal
advantage must be construed as deliberate attack on the organisation itself. According to
Barnard, “to fail in an obligation intentionally is an act of hostility” 19. No organisation will
permit it and it will respond with punitive action.

Barnard holds the view that a superior is not an authority and, strictly speaking he may not have
any authority. A communication may not be authoritative unless it is an effort or an action of the
organisation. In fact, assent of those to whom the communications are sent determines the
character of the authority. Authoritative official communications are only related to
organisational action. They have no meaning to those whose actions do not fall within the
cooperative system. For instance, the laws of one country have no authority for citizens of
another.

The following factors control the character of the communication system as a system of objective
authority: 20

(a) The channels of communication should be definite;

19
https://sk.sagepub.com/reference/hdbk_orgdiscourse/n12.xml (23rd September 2020, 9:00 pm)
20
Gross, Bertram M., op. cit., pp. 178-179.

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(b) Objective authority requires a definite formal channel of communication to every member of
an organisation;

(c) The line of communication should be as direct and as short as possible;

(d) The complete line of communication should usually be used;

(e) The competence of the persons serving as communication centres, that is, officers and
supervisory heads should be adequate;

(f) The line of communication should not be interrupted during the time when the organisation is
functioning; and

(g) Every communication should be authenticated

4.3 Responsibility
Barnard examines responsibility in a greater detail, along with authority. To him, responsibility
is the most important function of the executive. He examines responsibility from the point of
view of morality and defines it as the power of a particular private code of morals to control the
conduct of the individuals in the presence of strong contrary desires or impulses 21.
Responsibility is not determined by any one single moral code but by a complex set of
moral, legal, technical, professional, and institutional codes. Therefore, these codes always
regulate the working of organisations. In this process of regulation, the internal moral
sanction of individuals is more effective than the external sanctions. Barnard argues that
executive actions are always conditioned by the concepts of morality. But business is totally
unaffected by the higher concepts of morality. Therefore, he argues, that more and more research
needs to be undertaken on this important aspect of the relations between executive behaviour and
principles of morality. He feels that large organisations cannot be operated unless
responsibility is delegated. 22But he laments that one of the great weakness of the Functions of
the Executive is that it did not adequately address the question of responsibility and its
delegation and emphasis is too much on authority23.

21
Barnard, Chester I., The Functions of the Executive, op. cit., p. 263.
22
Wolf, William, B., Conversations with Chester I. Barnard, School of Industrial Labor Relations: Cornell
University, ILR Paperback Number 12, Ithaca, NY, 1973, p. 35.
23
http://www.uou.ac.in/sites/default/files/slm/HM-104.pdf (24th September 2020, 9:30 PM)

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4.4 Decision-Making
Organisations take decisions to achieve the purposes for which they come into being.
Barnard defines decisions as acts of individuals which are the result of deliberation, calculation
24
and thought involving the ordering of means to ends. There are two types of decisions -
personal and organisational. The former relates to the participation or otherwise in the
organisational process and are taken outside the organisation based on incentives organisations
offer and they need not necessarily be logical. On the other hand, the organisational decisions
relate to the organisational purpose, information-based, logical and can be delegated. They are
the result of discrimination, analysis and choice. Decision-making in organisations, according to
Barnard, is a specialised process. Based on his long years of experience, Barnard says that
decision-making in orgnisations is a burdensome task. For fear of criticism, the executives avoid
taking decisions and there is also a tendency not to delegate decisional powers resulting in the
executives being overwhelmed with the burdens of decision-making. Based on his long years of
experience, Barnard says that decision-making in orgnisations is a burdensome task. For fear of
criticism, the executives avoid taking decisions and there is also a tendency not to delegate
decisional powers resulting in the executives being overwhelmed with the burdens of decision-
making.

5. The Executive Functions

In organisations, executives perform various functions necessary to ensure coordination of the
cooperative system. They also act as channels of communication. However, all the work
undertaken by them, according to Barnard, is not executive work. Quite often, the executive may
undertake certain functions like the Vice-Chancellor giving classroom lectures or a manager
24
Barnard, Chester I., The Functions of the Executive, op. cit., p. 185.

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selling the products, which cannot be called executive work. To Barnard, executive work
involves a specialised work of maintaining the organisation in operation. The executive
functions are like those of the nervous system, including the brain in relation to the rest of the
body. Barnard classified the functions of the executive under three heads viz.,

(a) formulation of purpose and objectives;

(b) maintenance of organisation communication; and

(c) securing essential services from the individuals.

Formulation of Purpose and Objectives

The first function of the executive is to formulate and define purpose, objectives and ends of the
organisation. The purpose of the organisation must be accepted by all the contributors to
the system. Purpose must be subdivided into fragments and specific objectives must reflect the
detailed purposes and actions. The purpose becomes more and more general as units of
organisation become larger and more and more remote. Responsibility for long run decisions
is delegated up the line and responsibility for action remains at the base. The formulation and
definition of purpose is a widely distributed function and only the general part of which is
executive. The formulation and redefining of purpose requires sensitive systems of
communication, imagination, experience and interpretation.

Maintenance of Organisation Communication

This function has three important phases. The first is defining the ‘scheme of organisation’ or
defining the organisational positions; second is maintaining a personnel system and the third is
securing an informal organisation. The scheme of organisation deals with the organisational
charts, specification of duties and division of labour. It also represents securing the coordination
of work by dividing the purpose into subsidiary purposes, specialisation and tasks. It is also
related to the kind and quality of services of the personnel that can be brought under a
cooperative system. The inducements that are to be offered are also relevant. But defining the
scheme of organisation or organisational positions is of little consequence unless there are people
to fill the positions. The process includes, to Barnard, the selection of men and offering of

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incentives, techniques of control permitting effectiveness in promoting, demoting and dismissing

men.25

The first two phases are both complementary and are dependent on each other. Since, according
to Barnard, men are neither good nor bad but become good or bad in particular positions, there is
need to restructure the organisations, taking into consideration the available manpower. The
informal organisations promote the means of organisational communication. With good informal
organisations, the need for formal decisions gets reduced except in emergencies. Even a formal
order implies the informal agreement. The executives must always try to avoid orders, which are
clearly unacceptable and should deal with such situations through informal means. The informal
organisations perform the following functions:

 communicate unintelligible facts, opinions, suggestions and suspicions which cannot

easily pass through formal channels;
 minimise excessive clicks of political influence;
 promote self-discipline of the group; and
 make possible the development of important personal influences in the organisation.

Securing the Essential Services from Individuals

The task of securing essential services from individuals has two main aspects, viz., bringing
of persons into cooperative relationship with the organisation, and eliciting of services after
they have been brought into that relationship. These are achieved by maintaining morale and
by providing incentives, deterrents, supervision, control, education and training. Every
organisation, in order to survive, must deliberately attend to the maintenance and growth of its
authority, to do things necessary for coordination, effectiveness and efficiency. Barnard uses
‘efficiency’ in the specialised sense of an organisation’s capacity to offer effective
inducements in sufficient quantity to maintain the equilibrium of the system 26.

25
http://ndl.ethernet.edu.et/bitstream/123456789/62073/1/78..pdf (27th Septmber 2020, 7:30 pm)
26
https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=4817&context=dissertations_1 (27th September 2020,
8:00 pm)

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6. Leadership & Organisational Science

Leadership

Barnard attaches significance to leadership in organisations as it is critical to achieve

‘cooperation’. To him the cooperation is the creative process and the leadership is the

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27
‘indispensable fulminator’ of its forces. One of the functions of the leader is to create an
environment that will facilitate commitment of the members to the organisation. Barnard argues
that a leader should be a realist and should recognise the need for action even when outcomes
cannot be foreseen. He should also be an idealist to pursue the goals which may not be achieved
in the immediate future. 28Barnard lists out five essential qualities of a leader viz., vitality
and endurance, decisiveness, persuasiveness, responsibility and intellectual capacity.

Organisational Science

Barnard believed that it is possible to develop a science of organisation. He argued for the
integration of two cultures of management - its science and art. To develop a science of
organisation requires understanding of social anthropology, sociology, social psychology,
29
institutional economics, management, etc. It also requires higher order intellect. Intellect by
itself is not enough; it is also necessary to inculcate a sense of unity and create common ideals.

7. Conclusion, Criticism and Suggestion

Barnard viewed the organisations as systems of cooperation of human activity and proposed the
theory of “contribution-satisfaction-equilibrium” as the basis for individual contribution to

27
Barnard, Chester I., Organisation and Management, op.cit., pp.109-110
28
Barnard, Chester I., The Functions of the Executive, op. cit., p.293.
29
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC61497/ (27th September 2020, 9;00 pm)

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organisations. He rejected the theory of economic man and analysed multiplicity of satisfactions
and inducements as the basis for actions in organisations. . He examined the role of informal
organisations and considers them as essential and complementary to formal organisations. .
Barnard’s conceptualisation of authority is most significant. Introducing “acceptance” as the
basis of authority, he explains the conditions of acceptance and proposes the concept of “Zone of
Indifference” as the basis for acceptance of orders. Elaborating on the nature of exercise of
authority, He describes the features of communication system forming the basis of objective
authority. Barnard examines responsibility from the point of view of morality and considers
internal moral sanctions as more effective than external sanctions in controlling individual
behaviour in organizations. Even though Barnard considers purpose as central to the
cooperative effoet, he has not given full descriptive or prescriptive attention to the process
of its formulation. Barnard’s definition of authority understates the role of objective
authority and appears to assign individuals the choice of acceptance or rejection rather
than participation in the active integration of conflicting alternatives and interpretations.
Barnard argues that the individuals make utilitarian decisions based on available incentives.
Matthew Ensor, on the other hand argues, that the psychological perspective sees the key to
cooperation as the avoidance of regressive behaviour and it is the function of the executive to
provide an environment where the individuals in the organisation can examine themselves and
the context of their work from a collective perspective. 30 This perspective also challenges the
executive to take a more holistic role in enabling ongoing organisational change. Barnard also
did not attempt to resolve the apparent paradoxes in the relations between man and
organisation is another criticism. Instead, Fry, observes, that Barnard accepts the
inevitable tensions in the relationship while seeking a balance between the needs of the
31
individual and the organisation. Notwithstanding the criticisms, cooperation as a basic
necessity of human life and as the cause of human development is profoundly elucidated by
Chester Barnard. The physical, biological and social factors affecting cooperative action and the
functions of the executive to facilitate the cooperative effort are brilliantly analysed with
practical wisdom. A number of his remarks, conclusions and evaluations demonstrate an
unusually profound understanding of the complexity of organisation processes. The point he
30
https://www.semanticscholar.org/paper/A-Psychoanalytical-Critique-of-Chester-I-.-Barnard-
Ensor/a95d14743d6d885279929858655f1522b56f6e11?p2df (16th October 2020, 5:00 pm)
31
Fry, Brain R., op.cit., p.178.

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makes about the constant need to consider strategic factors in taking managerial decisions is
worthy of attention, so is his formulation of the zone of indifference. His acceptance concept of
authority, leadership as a process of fulfilling the purposes of organisation and management by
consent have an immense contemporary value and strengthen the democratic spirit in the modern
world. The views of Barnard still hold relevance because they are the combination of
intellect and experience and are the outcome of rational analysis of the reality, viewing the
situation as a whole. Barnard’s contribution was a conscious effort towards a ‘science of
organization’ and he combines the science of organisation with the art of organising.32

32
Mahoney, Joseph T., op. cit., pp. 159-172.

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Bibliography
Books:
 D. Ravindra Prasad and V.S. Prasad, Administrative Thinkers, 2 nd Edition, Sterling
Publisher Private Limited, 2010
 M. Laxmikanth, Adminstrative Theory, 1st Edition, Mc Grwa Hill Publication, 2017
 Prof. B.L Fadia and Dr. Kuldeep Fadia, Administrative Theories, 15 th Edition, Sahitya
Bhawan, 2020
 Rumki Basu, Public Administration : Concepts and Theories, 5th Edition, Sterling
Publisher Private Limited, 2004
 Mohit Bhattacharya, New Horizons Public Administration, 1 st Edition, Jawahar
Publishers & Distributers, 2018

References:
https://www.accountingnotes.net/organizations/organisational-structure/formal-and-informal-
organisation/17640

http://www.ddegjust.ac.in/studymaterial/mcom/mc-101.pdf

https://www.researchgate.net/publication/316283969_Systems_theory

http://epgp.inflibnet.ac.in/epgpdata/uploads/epgp_content/S000030PU/P001502/M016164/ET/14
6536953011.ET.Chester_Barnard-Marina_Pinto.pdf

https://archive.org/stream/KeyTerms/Administrative%20Thinkers%20-%20Prasad%20and
%20Prasad%20-%20Pub%20Ad%20Optional_djvu.txt

https://thebusinessprofessor.com/lesson/acceptance-theory-of-authority-definition

https://sk.sagepub.com/reference/hdbk_orgdiscourse/n12.xml

http://www.uou.ac.in/sites/default/files/slm/HM-104.pdf

http://ndl.ethernet.edu.et/bitstream/123456789/62073/1/78..pdf

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC61497/

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https://www.semanticscholar.org/paper/A-Psychoanalytical-Critique-of-Chester-I-.-Barnard-
Ensor/a95d14743d6d885279929858655f1522b56f6e11?p2df

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