Chester Barnard is best known as the author of The Functions of the Executive, perhaps the 20th century’s most influential book on management and leadership. Entire book is classified into 4 sections: 1. Preliminary Considerations concerning Cooperative Systems 2. The Theory and Structure of Formal Organization 3. The Elements of Formal Organization 4. The Functions of Organizations in Cooperative systems His theory is also known as Contribution- Satisfaction Equilibrium (Barnard’s Theory of Motivation)

2. Later on he studied economics
at Harvard University. He continued to
work odd jobs throughout his college
career to meet his financial needs.
Chester Barnard, was born in Malden, A Hill city in
Massachusetts State of America.
Barnard started of from a very humble origins. In his
youth, he worked on a farm.

3. But a lack of funds forced him to drop
out of Harvard before he completed a
final science requirement in physics or
chemistry.
However, a number of universities
later granted him honorary doctorates.
In fact he completed most of the requirements for a
Bachelor’s degree in economics just 3 years than 4.

4. Chester Barnard is best known as the author of
The Functions of the Executive, perhaps the
20th century’s most influential book on
management and leadership.
Barnard’s teachings drew on personal insights as
a senior executive of ATT in the 1920s and
1930s.
His importance lies in creating this book, the
only book he wrote in his life, after more than 4
decades of experience as a top executive in the
business environment.
He revolutionized the complete theory of
organizational structures, by focusing on the
organization as a cooperative system.
“Planning is one of the many catchwords whose present popularity is roughly
proportionate to the obscurity of its definition.” – Chester Barnard

6. Entire book is classified into 4 sections:
1. Preliminary Considerations concerning
Cooperative Systems
2. The Theory and Structure of Formal
Organization
3. The Elements of Formal Organization
4. The Functions of Organizations in
Cooperative systems

7. Decoding
Organizations &
Cooperative
Systems
Preliminary Considerations concerning Cooperative Systems
“Formal organization is that kind
of cooperation among men that
is conscious, deliberate,
purposeful.”
He Specifies that a formal
organization is part of a
"cooperative system.“
With this statement, he was the
first theoretician to enter the
realm of Systems approach to
the study of Organizations.

8. Decoding
Organizations &
Cooperative
Systems
Preliminary Considerations concerning Cooperative Systems
“Is 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.“

9. “Is complex of physical,
biological, personal, and
social components
who is in a specific
systematic relationship
(Marriage here!)
by reason of the
cooperation of her for at
least one definite end (till
death!).

10. Elements of Org.
An organization comes into being when
(1) there are persons able to communicate with each other
(2) who are willing to contribute action
(3) to accomplish a common purpose.
We infer two things from the Elements:
that an organization that
cannot accomplish its
purpose cannot survive.
that an organization that
accomplishes its purpose
has no reason for
existence.

11. Complete, Incomplete, Subordinate, and Dominant
Organizations
“Overlaying or embedded in the complex of informal organizations,
which in the aggregate we call great national and local societies, is a
network of formal organizations.” – Chester Barnard

12. Complete, Incomplete, Subordinate, and Dominant
Organizations
“The Dominant Organizations themselves are composed of the complex of the
subordinate organisations, so that what takes place within the latter, their existence,
their success or failure, affect the Dominant Organization .” – Chester Barnard
They are Independent.
They are Complete.
The Effect of Subordination is to limit their
purpose or the way in which they may operate,
and sometimes limit the status of persons
who may belong to them. Therefore, they are
- Dependent &
- incomplete.

13. The Elements of Formal Organisation
Contribution - Satisfaction
Equilibrium
The Theory of Authority

14. Contribution- Satisfaction Equilibrium
(Barnard’s Theory of Motivation)
Work > Incentives = No Motivation
Work ≈ Incentive = No Motivation
Incentive > Work = Motivation!
Work
Incentive

15. Incentives/ Inducements
Specific
General

16. The Theory of Authority
Authority of position Authority of leadership
"Authority of position" is
explained as occurring
when people are assigned
authority to communicate
from superior positions…
to a considerable extent
independent of the
personal ability of the
position holder.
In contrast, people
with superior ability
have "authority of
leadership." These
are rather Leaders
first, and then Boss.

17. The Functions of Executive
1. Maintenance of Organization
Communication
2. Securing Essential Services from
Individuals
3. Formulation of Purpose & Objectives

18. Bringing persons into cooperative
Relationship with the organization
Eliciting of services from them!
Maintenance of
Communication
Securing Essential
Services from Individuals
Developing Org Chart, specifying duties,
recruiting
Securing informal Organization

19. Purpose can be geographic, social and functional.
Purpose must be sub-divided into fragments, and
specific objectives must reflect the detailed purposes
and actions.
It also includes defining the ends of organisation.

20. Herbert A. Simon, Behavior
Scientist, in a 1988 interview, was
quoted as follows:
“Of course I built squarely on
Barnard (for my book Admistrative
Behavior), and have always felt
deeply indebted to him; science is a
cumulative endeavor. My general
debt is expressed in the
acknowledgements ."To Mr. Charles
I. Barnard I owe a special debt…”
The Functions of the
Executive appeared in at least four
lists of "best" or "most influential"
management and business books
between 2001 and 2011.
There is no significant mention
of the education of staff (i.e., the
executive's role as a teacher)
The book does not consider how
an executive of a corporation
interacts with the board of
directors or stockholders.
A passage on page 319 ("…It is
consequently necessary to say
things in a form which is not
correct from the standpoint of
the speaker or writer…") has
been interpreted as "advocating
lying.“- Frederick, William
Crittenden (1995)

21. THANK YOU