SYSTEMS APPROACH --CHESTER BARNARD

Structure
1 1.0 Objectives 1 1 . 1 Introduction
1 1.2 Systems Approach 1 1.3 Organisation as a Cooperative System

1 1.4 1 1 .S 1 1.6 1 1.7 1 1.8 1 1.9 1 1.10 1 1. I I 1 1.12

Formal Organisation Concept of Authority Zone of Indifference The Functions of the Executive A Criti~al Evaluation Let Us Sum Up Key Words Some Useful Books Answers to Check Your Progress Exercises
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81.0 OBJECTIVES --

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After studying this unit you should be able to:

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define a system describe the featuies of a cooperative system explain the theory of authority identify the zone of indifference explain the function of the executive; and assess thc contribution of Bprnard to administrative theory.

So far, in this Block you have studied the scientific managemenf, classical and human relations approaches. In particular you have studied the ideas of thinkers whose contributions have In this unit you will study the systems strengthened the disdpline of Public ~dministration. approach; particularly the contributions of Chester Barnard. Barnard is primarily considered as a behaviouralist as he laid emphasis on the psychological aspects of management. At the same time he is considered as a systems,theor.ist. He viewed organisation as a social system. Barnard, who had spent his life-tirne as a pra'ctitioner managing business 'systems', wrote two books "The Functions of the Executive" (1938) and "Organisation and, Management" (1948). In these books Barnard presented convincingly,his views on organisktiorl as a cooperative system.
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11.2 SYSTEMS APPROACH

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A system is defined as a set of arrangement of things so related or connected as to form a unity or organic whole. 'A system is composed of elements that are related and dependent upon one another but that when in interaction, form a unitary whole'. By definition any phenomenon can be analysed from a systems viewpoint. Systems approach is based on the thesis that all part+of an organisation are inter-related, inter-connected and inter-dependent. Systen~s approach by itself is not new. This approach was first developed in natural and werc physical bciences. Even in administrative and management literature, systems C0n~ptS used by Taylor and others during the early pan of this century. Whit is relatively new is the emphasis given to this approach in social science literature where krrowledge integration is keenly felt. For example, Talcott Parsons applied open systems approach to the study of social structures. Similarly psychologists, economists, political scientists and administrative

Public brganisations: The Paradigms

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analysts have been using the systems approach in the analysis of phenomenon. In admirtistrirtiveanalysis the systems approach is being widely used in recent years. in this unit you would study Bamard's conceptu;ilisation of organisations as cooperative systems. The contribution of Barnard to the understanding of organisation phenomenon is one of the important landmarks in the evolution of administrative theory. The theory which was developed and published in the late thirties continues to be debated and discussed. This indicates both relevance of the theory and its intellectual and conceptual potential. Barnard's theorycomes as both converging and culminating points of the theory of rationality on the ' one hand and the synthesis of formal and informal theory on the other. The purpose of his , theory, as stated by Barnard himself, is to provide a comprehensive theory of cdoperative behaviour in formal organisations. This theory was attempted not based on pure academic or theoretical exercise but on rich and varied experience Barnard had gained in various important administrative positions he occupied. It is this combination that makes Barnard's contribution quite important.

1 1 . 3 ORGANISATION AS A COOPERATIVE SYSTEM Bamard seeks to develop his theory around one central question viz., under what conditions cooperative behaviour of man is possible? For him organisation is a cooperative system. 1Ie haintains that 'cooperation originates in the need of an individual to accomplish purposes which he individually cannot achieve'. With the result organisation becomes an enlistment of other individuals cooperation. As many individuals are engaged in cooperative behaviour it constantly changes and the complex biological, psychological and social factors are in (constant interaction. The cooperative organisation for its survival must be "effective" in the sense of achieving oiganisation purpose and "efficient" in satisfying individual motives. Thus the individual and organisation become important. The executive should adopt the organisation to the needs of individual and the general environment. It is these concerns of "effectiveness" and "efficiency" that form the running thread of his theory of cooperative behaviour. Cooperative system needs to be understood in tehns of relationship between individual and organisadon. To start with Barnard seeks to understand the properlies that an individual possesses: these are (a) activities or behaviour arising from (b) psychological frlctors to which one added (c) the limited p w e r of choice, which results in (d) purpose. It is thcse four premises that ddermine Bamard's analysis. He advances an argument that there is a tendency to exaggerate the power of personal choice. Further, action is also based on the belief that individual has a choice: Bamard maintains that such a free choice does not exist. The individuals failure to conform is mistakenly believed as opposition to the organisation. In fact, it is not the opposition but a structural limitation where free choice of the individual cannot be either accommodated or reconciled to the organisational goals. It is this process which gives rise to training'and other incentives which are intended to facilitate the reconciliation of individual behaviour and the organisational requirements. Barnard seeks to understand human beings at two levels: One from inside the organisation and two from outside the organisation. From inside they are treated as 'participants in specific cooperative system'. Here they are regarded in their purely functional aspects. Their efforts are depersonalised and they have to fit into the fomalised roles. From the second angle a person outside any specific organisation has his ow? distinct qualities. These two aspects, according to Barnard, are not alternative in ti,me but are simultaneously present. These.two aspects are always present in cooperative systems. It is from such a position a situation arises where the activities of the person are nearly a part of non-personal systems of activities from one angle and from the second angle the individual is outside and opposed to the cooperative system. 1t.k these opposing and conflicting aspects that require a serious ' examinition to understand the organisation phenomenon as a system of cooperation.

An examination of behaviour of the individuals should start with an enquiry as to how indhiduals join a cooperative system or an organisation. The individual makes a choice on the basis of (1) purposes, desires, impulses of the moment, and (2) the alternatives external to the individual. Organised effort results from the modification of the action of the individual through contl~ol of or iiifluence upon one of these categories. The desires, impulses, wants etc. are popularly cbaracterised as 'motives'. They form an important' dimension of human behaviour. It is ip the process of expressing his motives that man comes to

know of them. The concepts of 'effectiveness' and 'efficiency' are rooted in the motivational processes. 'Barnard observes that when a specific desired end is attained through an action, that action is said to be 'effective', when the action leads to unexpected or unanticipated consequences fhen the action is described as 'inefficient'. However, if the unexpected consequences satisfy desires or motives of.individuals not necessarily and directly pres;med by the'action, the action becomes 'efficient' but not 'effective'. Thus the unanticipated consequences,may provide the criterion in judging the action as 'effective' or 'efficient' or both. In oth& words an ac;ion is effective if it accomplishes its specific aim. It becomes efficient when it satisfies the motives of that aim, and without helping in attainment of the goal towards which the activity is directed. From the above debate it is evident that there are two philosophical propositions about the human ~~ature: (a) there are philosophies that explain human conduct as a presentation of universal f~rces,'that regard the individual as merely responsive, that deny freedom of choice or of wili.that make of organisation and socialism the basic position, (b) there are that grant freedom of choice and of will,that make of iridividuirl as an independent entity, that depress the physical and social environment, to n,secondary and additional condition. Barnard seeks not a recollciliation of these two opposite pc;s,itions but wants to understand and explain how these two positio~ls get manifest in the 'cooperative systems'. From the experience that the cooperative systems throw up, one can understand depending ll upon the context in which how these two philosophies influence human ~ ~ t i 0 the cooperative systems operate.
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Systems ripproiirh-

Chester Rarnardt

Examining the phenomenon of cooperation, Barnard traces the causes for cooperation in physical and physiological fiictors. Individuals enter cooperative actic-~n because as individuals they are not capable of realising their goals. It is their physiological liinitations ihat drive them into cooperative action. The oiher way to look at cooperative phenomenon is that the nature puts such a constraint on a single individual that he cannot overcome it except through cooperative action. For instance, there is a stone and man warits to liftit. But he cannot do so. His inability can be looked from two points; one, he is too small to lift it; two, . the stone is too big to be lifted. From one angle the limitation, is,physidogical and..ftom the other angle it is physical. Either way cooperation becomes necessary once a man sets il purpose of lifting the stone. Limitations always are related to the puipose or goal that one aims at. . . In the situations of the above kind the individual characteristics requite to be undcrstood.Biit the individual faculties by themselves may not mean anything in a cooperative situation where the faculties of individuals are pooled together. Therefore in all cooperative activity the objective of action is removed from the individulil and replaced by the collective objectives. Sincc the ends of cooperative action can be of different kind, each type of action for cooperation. Added to it the ob.jectives that man seek of are becomes a limiting cond~tion never stable as the environment changes resulting in alteration of purposes calling for new types of cooperative action. Thus the limitations in a cooperative action arise not only because of the limitations of individuals but also due to the very structure of cooperative i of cooperative action depends upon its capacity to cope with action. ~ h ueffectiveness changing environment and purposes o C cooperative action.
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The above discussion indicates that cooperation depends upon two inter-related and interdependent classes of processes: (a) those which relate to the system of cooperation as a whole in relation to the environment; and (b) those which relate to the creation or distribution of satisfaction among the individuals. The instability and failure of organisations or cooperative processes arise from defects in each of these classes of processes separately and from defects in their combinations.

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111.4 FORMAL ORGANISATION -- It is the cooperative systems that give rise to formal organisations. Barnard defines organisation as a "system of conscioi~sly coordinated personal activities or forces". The organisations come into existence when ( I ) there arc; persons able to cornrnunicafe with each other (2) who are willing to contribute action (3) to accomplish a common purpobe. The elements of an organisatibn are (1) cor;..vunication; (2) wilringness; (3) common purpose. Elaborating this point Barnard points out that vitality of organisation depends on

Public Organloatlons The Paradigms

the willingness of the individuals to contribute forces to the cooperative system: ~ h , s willingness requires the belief that the purpose can be cm-ied out. However willingness to contribute disappears when effectiveness ceases. The continuance of willingness also depends upon the satisfactions that are secured by individual contributors in the process of c a v i n g out the purpqse. If the satisfactions do not exceed the sacrifices required, willingness disappeardand the condition is one of organisation inefficiency. If the satisfactions exceed the sacrifices, willingness persists, and the condition is one of efficiency of organisation. Based on the above assumption Bamard observes that initial existence of an organisation depends upon a combination of communication, willingness and purpose which are suitable to the external environment. Its survival depends upon the maintenance of an equilibrium of the system. The equilibrium has both internal and external dimensionsl The internal equilibrium depends upon the proportion between these three elements. The external equilibrium has two terms in it; first, the effectiveness of the organisation which comprises the relevance of its purpose to the environmental situation; and second, its efficiency, which comprises the interchange between the organisation and individuals. It is in maintaining the equilibrium at two levels that a formal organisation persists and thrives. For a deeper understanding of the cooperative systems and the processes, it is necessary to understand the relationship between formal and informal organisation. Barnard maintains that it is a part of human nature and a social process that men develop a network of relationships on systematised interactions. This gives rise to the growth of conventions, customs and institutions. They have tremendous influence on cooperative systems. Infact Bamard ernphasises that every informal organisation-a result of social interactions-gives rise to formal organisation and every formal organisation because of network of interpersonal relationships gives rise to informal ofganisations. The informal organisation . becomes necessary to the operation of formal organisations as a means of communication, or cohesion, and of protecting the integrity of the individuals: The formal organisations, however, have certain distinct elements which are crucial to the understqndir~g of the cooperative systems and their capacity to make use of the structural needs and individual aspirations. In the formal systems of organisation, division of labour is integral to the organisation. These which is described as specialisation or fi~nctionalisation two terms, when subject to further analysis, indicate that men specialise but work is functionalised. In either event, there is division of labour which results in corresponding division of work. The bases of specialisation of organisation are five: (a) the place where work is done; (b) the time at which work is done; (c) the persons with whom work is done; (d) the things upon which work is done; and (e) the method or process by which work is done. The process of cooperation requires all the five requirements. The efficiency of organisation largely rests on how these requirements are met.
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For the purpose of cooperative effort in a formal organisation the question of incentives is also important, The net satisfaction which induces a rnan to contribute his efforts to an organisation results from the positive advantages as against the disadvantages. The incentives are of two kinds; material and non-material. The material incentives include the conditions of stilary and chances of promotion etc. There are also the nonmaterial incentives which include the hiernrchy of positions, with gradation of honouis and privileges and maintenance or pride of organisation, community sense and so on. Both the types of incentives, Barnard rnainta~ns, are essential. He further emphasises that no organisation can exist without a combination of these two types of incentives. *
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Ch'eck YoGr Pxogress 1 Note: i); Use the space below for your answers: "' ii) Check your answers with those given at the end of the unit. i) Define a system.

ii) Why do individuals enter into cooperative action?

Systems ApproechChester Harnarct

iii) Describe the elements of formal organisation.

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iv) Explain the bases of specialisation in fbrni:il organisations.

II.S-CONCEP'.!' OF AUTHORITY-

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.Another irnportalit element for cooperative efforl in a general organisation, which is believed to be7most crucial, is the element of "authority". Rarnard defines authority as "the character of-a communication (order) in :I formal organisation by virtue of which it is accepted by a cbntributor or 'member' of the hrgarilsation as governing the action he contributes". This , indicates that for Barnard authority consists of two aspects; first, the subjective aspect, the personal aspect, the accepting of communication as authoritative and second, the objective by virtue of which it is accepted. aspect-the character In the con~munication Barnard further'argues that if a directive communication is accepted by one to whom it is addressed, its iluthority for him is confinned or established. If is admitted as the basis of action. Disobedience of such a cotnmunication is a denial of its authority for him. Therefore onder the definition the decision as to whether an order has authority or not lies with the persons to whom it is addressed and does not reside in "persons of authority", or those who ,i~;ue these orders. H; adds that organisations fail because the authority fails which means thky cannot secure sufficient contribution of personal efforts tobe effective or cannot induce them on terms that are efficient. Further authority fails because the individuals in sufti~.ignt . . numbers regard the burden involved in accepting necessary orders as changing the balance of advantage against their interest and they withdraw or withhold the indispensable contributions. It is for this reason Barnqd emphasises '"he necessity of the assent of the individual to establish-authority f o r l i h is inescapable". A person can and will accept'! co~munreati~nas" authoritative only when four conditions simultaneously obtain: (a) h$ can ~nd does understand the communication; (b) at the time of his decision he believes that it is

, Public Organisations:
The Paradigms

not inconsistent with the purpose of the organisation; (c) at the time of his decision, he believes it to be compatible with his personal interest as a whole; and (d) he is mentally and physically able toconiply with it.
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T h ~ above s description leads to an important question as to how is it possible to secure such an important and enduring cooperation as we observe if in principle and in fact the determination of authority lies with the subordinate individuals. It is possible because the decisioris of individuals occur under the following conditions: (a) orders that are deliberately issued in enduring organisations usually comply with the four conditions mentioned above; (b)there exists a "zone of indifference" in each individual w~thin which orders are acceptable without conscious questioning of their authority; ( c ) the interests of the persons who contribute to an organisation as a group result in the exercise of an influence on the subject, or on the attitude of the individual, that maintains a certain stability of this "zone of indifference".

11.6 ZONE OF .INDIFFERENCE

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We have diskussed in the previous section that the acceptance of authority in organisations depends uponsthe zone of indifference. What then is the Zone of Indifference? If all the orders for action reasonably practicable are arranged in the order of their acceptability to the person affected, the range may consist of a number of orders which are clearly unacceptable, that is, which certainly will not be obeyed. Another group may be somewhat neutral, that is, either barely acceptable or barely unacceptable. A third group may be unquestionably accep't3ble. This lasttgroup, Bamard says, lies within the "zone of indifference". The person affected will accept orders'lying within this zone and is relatively indifferent as to what the order is so far,as the qllestion of authority is concerned. The zone of indifference will be wider,or narrower depending upon the degree to which the motives exceed the burdens and sacrifices which determine the individuals adherence to the organisation.

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If the inducements are not adequate, the range of orders that are likely to be accepted by the the organisations would be limited. In o t h e ~ words, you may say that the zone would be short. The executive, therefore, should be conscious of the zone. He should issue only those orders which wopld fatt within the zone and are acceptable. If the executive is not conscious of this. Barnard says, that the.executive either does not know how to use his authority o r he is abusing the authority. +.

11.7 THE FUNCTIONS OF THE EXECUTIVE

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From the above processe.i and considerations, the functions of the executiGe arise, The essential executive functions, as stated by Barnard, are first, to provide the system of communication; second, to promote the securing of essential efforts, and third, to formulate and define the purposes. The first function of maintenance of organisational communication has two phases. The first is definition of organisational positions and the se6ond is maintaining a person~lel system. The forfner requires organisational charts, specification of duties, divisicin of work, etc. The latter includes recruiting men who liave appropriate qualifications, offer-ing incentives, etc. These two phases-are complementary and depend on each other. The second function of securing essential services from individuals a l s has ~ two main aspects. The first is bringing perssl!s into cooperative relationship with the organisation and the second is eliciting services and contributions from such people. These can be achieved, according to Barnard, by maintaining morale, education and training, incentives, and supervision and control. The third executive,function is the fom~ulation of organisational objectives and purposes,

. These pudoses must be widely accepted by all the members of the orginisation.

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The abbve three functions arise basically from the need for cooperation among various h'uman beings as every organisation is basically a cooperative system, the cooperative effort requires to be consciously coordinated, It is in this area of organisational process the executive has td perform the role in realisir~g the goals and purposes of a cooperative system. '

11.8 A CRITICAL EVALUATION

Kenneth Andrew~ who wrote introduction to the book 'Functions of Executive' observes that Barnard was on his subjective experience. While it makes his analysis insightful, it also works' as a constraint. The theory does not provide a clue as fo how this theory can be extended to the various facets of organisations of different types. He further observes that Barnard has not dealt about the institotions of top management. Barnard emphasises on purpose as a central question but pays no attention to the choice of the purpose in a changing world or to the processes of formulating goals and objectives for the organisation. h fact what is important is the participation of individual in the conflict and the way he seeks to integrate it. Also he had not paid adequate attention to the day-to:day problems that arise In the organisation of human beings. The lack of attention to the goals could be on account of the fact that the organisations that he held charge of had constant goals, with the result he did not give full descriptive or prescriptive attention to the processes of tbrmulation. Barnard's theory while focuses its attention on cooperative effort, it does not adequately deal with the creative development of our individual. Nor does it deal with the question as to under what conditions individuals develop colnrnitment to the organisation and how such commitment gets strengthened.
The definition of author~tyunderestimates the objective conditions and deals with the details of subjective factors as acceptance of the individuals and not on the persons of authority who exercise it. Authority, infact has an economic dimension. Economically the subjective dependence depends on the market structure. In a society where the range of alternatives is large. there individuals may enjoy relative freedom. But where the opportunities are restricted, the individual has no freedom to reject authority. In other words in a capitalist society while his interpretation'is valid, in feudal or. underdeveloped societies such freedom does not exist.

Systems ApproachChester Barnard

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The socialisation process, the family structure, the educational processes deterpine individuals attitude towards authority. Infact it is these processes which shape the value system. Barnard has not taken the larger context into account, to that extent his theory suffers.
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Check Your Progress 2 i) Use the space below for answers. ii) Check your answers with those given at the end of the unit. i ) Define authority and explain its subjective and objective nsp;cts.

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"Authority lies with the persons to whom it is addressed and not with those who issue ord&rsV. Explai,n,

Public Organisations: The Paradigms

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iii) Describe the concept of 'Zone of Indifference'.

iv) What according to Bapard are the functions of the executive?

111.9 LET US SUM-UP

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In this unit you have studied the contribution of Chester Barnard. He laid emphasis on organisations as cdoperatiye systems. This conveys,the very essence of group effort. He expounded the nature of fohnal (structure) and infotmal organisation (relationships) and their mutual inter-dependencies in a lucid way. ~e iaid emphasis on the acceptance of ' authority by others. Barnard has also explained the existence of a zone of indifference. If the orders fall within this zone they are unquestionably accepted. All these penetrating insights into the cornplex nature of organisation and its working would enable you to understand > . organisations better. ,

11.10 KEY WORDS

Authority: Legitimate exercisk of pow& Communication: Inter-change of information between different levels of organisation Converge: To approach from different directions iowards the same point Prescriptive: Laying down' rules
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11.11 SOME USEFUL BOOKS

Barnard. Chester 1, 1938. The Funcfifionso f rhr Executive; Harvard ~nivcrsit; press: Cambridge. Bhattacharya, Mohit. 1987. Public Administratidp; The world Press Private Limited: ' Calcutta. r Luthan S. Fred, 1 9f 7. Orga~isational Behalsioldr.; McGraw-Hill Book Company: New York.

Prasad, Ravindra D., et. al, (eds.), 1989. ~dm'inistt~ati\~c Thinkers; Sterling Publishers: New Delhi Pugh, D.S., et. al, 1977. Writers on Orgqt~?i.sutio~?; Penguin Books: Lords.

S$stemS Apprnach~ h ~ s t Barnard er

EXERCISES
Check Your Progress 1 i) See Section1 1.2 ii) See Section1 1.3 iii) See Section1 1.4 iv) See section-11.4
Check Your Progress 2

i) ii) iii) iv)

See Section1 1.5 See Section1 1.5 See Section1 1.6 See Section. . 1 1.7