The Functions of the Executive

by Chester I. Barnard
- Highlights
For the Experiential Learning Initiative (ELI)
Session for DMP students by:
Prof. C. P. Joshi
Dean- MMM, MFM, MIM & MHRDM
Area Chairperson(Strategy, International Business & General Management)
& Program Co-ordinator PGDM & PGDM (IB)
Session on DMP - Prof C P Joshi

About the author Chester I. Barnard

Chester Irving Barnard(November 7, 1886 June 7, 1961) was
anAmericanbusinessexecutive, public administrator, and the author of
pioneering work inmanagementtheory andorganizational studies.
Barnard joined theAmerican Telephone and Telegraph Company(now AT&T) in
1909. In 1927, he became president of theNew Jersey Bell Telephone
Company. During the Great Depression, he directed the New Jersey state relief
system.

His landmark 1938 book,The Functions of the Executive, sets out atheory
of organizationand of the functions of executives in organizations. The
book
has
been
widely
assigned
in
university
courses
inmanagementtheory andorganizational sociology. This year 1938 was
towards the end of the Great Depression in the United States.
He was elected a Fellow of theAmerican Academy of Arts and Sciencesin
1939.He was the President of theUnited Service Organizations(USO), 194245. Upon retiring from business, he served as the President of theRockefeller
Foundation, 194852, and as Chairman of theNational Science Foundation,
1952-54.In the late 1950s, he was among the first members of theSociety for
General Systems Research
Session on DMP - Prof C P Joshi

About the book The Functions of the Executive

The Functions of the Executiveis a book byChester I.
Barnard(18861961)
that
presents
a
"theory
ofcooperationand organization" and "a study of the functions
and of the methods of operation ofexecutivesin formal
organizations." It was originally published in 1938.
The theories for this book began to get into public knowledge
in 1936 when Barnard gave a lecture atPrinceton Universityon
"Mind in Everyday Affairs."In this lecture, Barnard described
the differences between "logical" and "non-logical" (i.e.,
"intuitional") mental processes. He encouraged the use of
non-logical processes "for many conditions and purposes.

Justice Cardozos Yale Lectures Nature of the Judicial

Process in 1937served as an inspiration for Barnard to also
present his hypotheses in an orderly fashion.
Session on DMP - Prof C P Joshi

About the book The Functions of the Executive (contd.)

This book is notable for its focus on how organizations actually
operate, instead of previous approaches to organizations that
emphasized "prescriptive principles."It has been praised for
being one of the first books to considerleadershipfrom a social
and psychological viewpoint.
An article inPublic Administration Reviewreported that an
informal advisory panel voted it one of the most influential
books inpublic administration published between 1940 and
1990.
Part I deals with "Preliminary Considerations Concerning
Cooperative Systems." The book's Part II dwells on "The Theory
and Structure of Formal Organizations." Part III is titled "The
Elements of Formal Organizations". "The Functions of
Organizations in Cooperative Systems" constitutes the
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concluding part of the Session
book.on DMP - Prof C P Joshi

The Introduction by Kenneth Andrews

Kenneth Richmond Andrews(1916 2005), was a leading American author on

Strategy who along withH. Igor AnsoffandAlfred D. Chandler, was credited with the
foundational role in introducing and popularizing the concept ofcorporate strategy.

The Andrews Framework (now popularly known as SWOT) introduced in the 1960s is
perhaps the earliest concept of business strategy to become popular in the core
strategy courses at the leading business schools across the globe. His book The
Concept of Corporate Strategy (1971) was a leading book on Corporate Strategy to be
used by premier business schools in many countries and by practicing company
executives.

In the introduction to the book, Andrews states that the book incorporates the rich
insights of Barnards long career in executive practice. He says that Barnards vision
of cooperation and organization structure differs from the conventional strategic
thinking of those times in terms of
greater emphasis on cooperation within
organizations.

Andrews mentions that Barnards approach is different from the traditional premise of
differentiating between efficiency and effectiveness and that Barnard views the whole
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organization as a social system guided by a central purpose.
Session on DMP - Prof C P Joshi

Opening quote for Chapter 6, Strategy and

the Business Landscape by Pankaj Ghemawat
(2008):

But, we must now refer to one

question about systems in
general,
and
about
organization
systems
in
particular, the answer to which
is of fundamental importance. I
refer to this question as to
whether the whole is more than
the sum of the partswhether
there emerge from the system
properties
which
are
not
inherent in the parts.
Session on DMP - Prof C P Joshi

Relevance to Corporate and Business Strategy

Before going into this classic book The Functions of the Executive by
Chester Barnard, let us pause to think what possibly inspired a leading
strategy author Pankaj Ghemawat to quote from this book for the Chapter
on Choosing Corporate Scope.
To my mind, this question Barnard posed in 1938 continues to be one of
the leading considerations for a company making its strategic choices
even today.

The importance of the system as a whole as against components thereof

is explained by Pankaj Ghemawat in Chapter 3 of the same book as
quoted below:

After all, competitive advantage comes from an

integrated set of choices about activities. A firm
whose choices do not fit together well is unlikely to
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succeed.

Chapter 15, Part IV The Executive Functions

The Functions present a view of an organization as a unique type of system.

Executive work indeed concerns the maintenance of the organization; the
first moral duty resides in ensuring the survival and sustainability of the
organization. The search for the stable state, however, represents a means
but not the ultimate objective of the organization.

Barnard classifies the essential Executive functions under the following

heads:
The Maintenance of Organization Communication Establishing
the means and the system for Communication

1.

The Scheme of the Organization Phase I of the Function; keeping

other factors constant, this is assumed to be the strategic factor

i.

Personnel various kinds of services for the executive functions;

dependence on responsibility / regularity / personal loyalty;
divided into a) relatively general abilities and b) specialized abilities
iii. Informal Executive Organizations maintaining a general condition of
compatibility; communication of intangible facts, opinions,
suggestions and undercurrents and unarchived anecdotes
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ii.

Session on DMP - Prof C P Joshi

Chapter 15, Part IV The Executive Functions (contd.)

2.
i.

3.

The Securing of Essential Services from Individuals

Bringing persons into collaborative relationship with the organization
securing personnel of new organizations, supply material for growth of
existing organization, replace losses due to transitions and attrition;
bringing persons within reach to secure services and application of that
effort used
ii. Eliciting of services from such persons The concept of Inducements
and Incentives along with maintenance of morale using deterrents,
supervision, control, inspection, education and training
Formulation of Purpose and Objectives
Define purpose, objective and ends of the organization Critical aspect
is responsibility i.e. the delegation of authoritative responsibility;
Only the general part of the purpose is executive in nature since
formulation and definition of the purpose is a widely distributed function

Session on DMP - Prof C P Joshi

Chapter 17, Part IV The Nature of Executive Responsibility

Nature
of
Executive
Responsibility
discussesethics and integrity. Barnard observes
that "cooperation, not leadership, is the creative
process; but leadership is the indispensable
fulminator of its forces.In turn, morality is
critical to leadership: "organizations endure in
proportion to the breadth of the morality by
which they are governed.
The Moral Code Conflict Paralysis of action,
emotional tension; conformance to one and
violation of another code; substitute action
complying with the code of ethics
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Chapter 17, Part IV The Nature of Executive

Responsibility (contd.)
Executive positions
a. imply
a complex morality laws, charter provisions;
obedience to the general purpose; general purpose of the
department, general ethical standards of subordinates,
technical situation, code for informal executive organization,
code for the organizational good, code for informal
organization of the department & technical requirements
b. require a high capacity of responsibility dependability
and awareness of character
c. commensurate general and specific abilities as moral factor
d. Creating morals for others
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Chapter 17, Part IV The Nature of Executive

Responsibility (contd.)

The creative aspect of executive responsibility is the highest

exemplification of responsibility dealing with conflicts of morals
within the organization codes

The creative function as a whole is the essence of leadership

identification of personal codes and organizational codes in view of
the leader; carrier of conviction to the personnel of organization

Leadership could be wrong and may often fail. The leader may
believe his personal morality is identical to that of the organization
and this may lead to a pitfall. Leadership does not defy the laws of
nature or cooperation. However, leadership is indispensable.

Executive responsibility is that capacity of leaders by which

reflecting attitudes, hopes and ideals are compelled to bind the
wills of people into managerial
decisions for action.
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Conclusions and learning from the book

1.Chester Barnards approach to the Functions of the
Executive in an organization differs from the
traditional thinking in terms of formalization with
clear roles and responsibilities.
2.He sees cooperation within the organization as an
equally important prerequisite for long term
organizational success.
3.His view of organizations as social institutions
implies the responsibility on its leaders and
managers to be ethical and observe the highest
levels of integrity in their business decisions in the
context of the organizational
Session on DMP - Prof C purpose.
P Joshi
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Conclusions and learning from the book (contd.)

4. Leadership failure as spoken about by Chester Barnard
in his book published way back in 1938 was seen in
many leading companies like WorldCom, Enron and
Lehmann Brothers in the early 2000s.
5. The field of strategy is increasingly recognizing the
importance
of
cooperative
relationships
among
companies (not only among company executives) and in
fact strategic alliances between companies based in
different countries are the order of the day in the
competitive international business environment.
6. Increasingly, large and successful business organizations
are playing the role of social institutions giving both
economic and social stability to the community and not
just maximizing shareholder
Session on DMP - value.
Prof C P Joshi
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Some more implications for Strategy

In Chapter 1 of his book, Strategy and the Business

Landscape (2008), Pankaj Ghemawat quotes
Chester Barnard in the opening quote for Origins of
Strategy:

If we wish to increase the yield of grain in a

certain field and on analysis it appears that
the soil lacks potash, potash may be said to
be the strategic (limiting) factor.

the above mentioned quote illustrates two

important concepts in Strategy:
The Resource Based View of the Company (RBV)
Cost drivers
We will study more of these two concepts in the
forthcoming ThirdSession
Trimester
on DMP - Prof C P Joshi
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Some more implications for Strategy(contd.)

According to Chester Barnard, the highest managerial traits

are essentially intuitive. These complex processes are hard
to analyze.
Management
Education
strives
to
encourage
the
understanding of classic analytical frameworks in Strategy to
equip managers with the right approach towards solving a
problem.
However, due attention must also be given to educate in the
non logical traits that are a mixture of feelings and
sentiment, comment and commitment, certainty and
uncertainty which goes into every decision and judgment.
Leading Strategy author Tarun Khanna says, Whether as
managers or as academics, we study business to extract
learning, formalize it, and apply it to puzzles we wish to
solve. Thats why we go to business school, why we write
case studies and develop analytic frameworks, why we read
HBR.
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References

Ansoff, H. Igor, 1991, Critique of Henry Mintzbergs The Design School: Reconsidering
the basic premises of strategic management,Strategic Management Journal, vol. 12,
no. 6, pp. 449461.
Barnard, Chester I."The Functions of the Executive: 30th Anniversary Edition". Harvard
University Press.
Chandler, Alfred Dupont, 1962, Strategy and structure: Chapters in the history of the
industrial enterprise, MIT Press, Cambridge.
Christensen, Roland C., Andrews, Kenneth R. and Bower, Joseph L., 1978, Business Policy
Text and Cases (Fourth Edition)
Gabor, Andrea, 2000,The Capitalist Philosophers: the Geniuses of Modern Business
Their Lives, Times, and Ideas, New York: Times Business.
Ghemawat, Pankaj, 2009, Strategy and the Business Landscape (Third Edition),
Pearson Prentice Hall
Hamel, Gary Paul, and Prahalad, C. K., 1989, Strategic Intent, Harvard Business Review,
vol. 67, no. 3, p. 61.
Khanna, Tarun, 2014, Contextual Intelligence, Harvard Business Review.
Mahoney, Joseph T. , 2002,"The Relevance of Chester I. Barnard's Teachings to
Contemporary Management Education: Communicating the Aesthetics of
Management".International Journal Organization Theory and Behavior5(1-2): 159172.
Mahoney, Joseph T. and Godfrey, Paul, 2012, The Functions of the Executive at 75: An
Invitation to Reconsider a Timeless Classic.
http://business.illinois.edu/Working_Papers/papers/14-0100.pdf
Rainey, Hal G., 1991,Understanding and Managing Public Organizations(First Edition).
San Francisco: Jossey-Bass. Session on DMP - Prof C P Joshi
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Thank You.
Questions?
Session on DMP - Prof C P Joshi

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