Masood Mortazavi's Weblog

Monday November 08, 2004

[ Economics ] More on Chester Barnard's Principles of Management

This image is from an earlier game between Barcelona and AC Milan. The wall requires more than one player. The best set ups do, too.
Vedastus Lyamabumbe of the Stanbic Bank has asked for further clarification of what I had written earlier about Chester Barnard.
Answering Mr. Lyamabumbe's question is a giant task given the limitations on my time and particularly when I don't have the book in my hand and have to write from rough memory.
First, it is important to realize that Chester Barnard's project is a descriptive one, not a prescriptive one. So, there is no use looking for management tools or silver bullets hidden in it. However, like all good descriptive and diagnostic projects, it is infused with the aura of incredibly valuable prescriptions.

Chester Barnard is ("is" because his ideas are still alive) a theoretician of organizational behavior in particular and organizations in general.

To begin with, he attempts to shed light on the causes behind organized activity, the primary reasons being various kinds of physical or mental limitations that individuals inherently possess. For example, a device may require two people for its proper operation due to visual or motor limitations of a single individual to get around the device in a timely manner. Sports is a prime example of organized behavior. Take soccer. We need a number of players to play it, to drive the ball forward and to score a goal, or to defend a goal (as Barcelona and AC Milan attempted superbly in their game last week on the U.S. 2004 presidential election day).

At the start, Chester Barnard also considers questions of effectiveness and efficiency. He notes that efficiency depends on satisfaction of personal needs and aspirations, because only through such satisfication in organization are individuals motivated to contribute effectively. He then moves on to relationships in organizations and the importance of communications and the role of management in establishing proper modes of communications for an organization. He describes how leadership and management inherently arise in organized activity in response to communication and coordination needs of the group as soon as the number of participants increases beyond a certain level.

Chester Barnard has a bottom-up theory of organizations. What interests him is how the simple organization gives rise to the larger, more complex ones, which are a posteriori outcomes of organized groups coalescing. Organizations grow through inclusion of more groups from bottom up, either through coalition or acquisition.

He next moves to a description of the economy of incentives in organizations, noting that monetary incentives are not the only incentives that move people to contribute, returning to his original ideas about efficiency as determined by motivation to contribute.

The economy of incentives in organizations is actually a core piece of his book, at least as far as I have read it. The book is a rather hard and dry read but a rewarding one with too much packed into it to unpack in a short note like this. So, I'll have to continue with a few more notes as time permits.

2004-11-08 10:26:31.0 -- ; Permalink ; Trackback.