Foundations of Management: Chester Barnard's View on Efficiency

This essay examines Chester Barnard's foundational contributions to management theory, specifically focusing on the concepts of efficiency and effectiveness within organizations. The essay begins by introducing Barnard and his key ideas, including his definition of organizations as cooperative systems and the importance of the 'inducement-contribution' theory. It then delves into a detailed discussion of efficiency versus effectiveness, exploring whether an organization can be efficient without being effective. The essay analyzes the relationship between these two critical aspects of organizational performance, drawing on Barnard's insights to highlight the importance of both doing things right (efficiency) and doing the right things (effectiveness). It further discusses how Barnard's views on leadership, decision-making, and the role of human capital management contribute to organizational success. The essay also considers the practical implications of Barnard's ideas, examining how organizations can balance efficiency and effectiveness to achieve their goals, including the importance of asset allocation and resource management. The essay concludes by emphasizing the interconnectedness of efficiency and effectiveness and their impact on overall organizational success.

Foundation of management
Chester Barnard’s view
A discussion on can an organization can be ‘efficient’ without being ‘effective’
1500 words 3/3/18

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Contents
Introduction......................................................................................................................................2
About Chester Irving Barnard.........................................................................................................2
Chester Barnard’s view....................................................................................................................3
Efficiency versus Effectiveness.......................................................................................................4
Effective yet inefficient...................................................................................................................7
Conclusion.....................................................................................................................................10
References......................................................................................................................................10

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Introduction
Motivation is the course of action of an individual’s needs and desires and with the help
of motivation, an individual’s path could easily be changed. In organizational context, this term
is crucial in various aspects as it helps the management to deal with its employees in an effective
manner. Motivation could be provided in monetary terms or by fulfilling employees’ needs and
desires within the workplace. A constant effort is made by companies for sustaining in the
market and in the competitive world. Most organizations are working hard to get it right and
remain on top. Management doesn’t know the satisfactory valuation of their performance.
A lot of methods, models and framework for showing units assessment create a stress for
an organization as they have to select the path that is same as the philosophy and believe of an
organization. Effectiveness and efficiency the most important points to be considered for the
performance of an organization. The words Effectiveness and efficiency sound different to
managers but as per Chester Barnard’s these two are same words to remain successful
(Fernández, 2010).
Performance of Organizations mostly judge by the effectiveness. Mission, goals and
vision is the main focus they want to achieve. Organizations judge their performance as per their
employees’ efficiency. The desired output is achieved by the finest use of resources. The point to
be noticed is the difference of whether the organization is effective or efficient or vice versa. Is it
important to highlight the differences? The main aim of this discussion is to view the
performance of an organization on the basis of effectiveness and efficiency. The objectives:
 The efficiency and the effectiveness concepts
 Differences and proximities between effectiveness and efficiency.
About Chester Irving Barnard
The American business manager Chester Irving Barnard was a pioneer in generating
theories of management and studies about organizations. The book named “The Functions of the
Executive” discusses about the organizational theories and the executives function in a firm. This
book is used in many university courses as organizational sociology and management theory. He

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said the organizations are a result of corporation of human activities and discussed the causes of
organization’s short living. As per Barnard the necessity of organization is its efficiency and
effectiveness (Malcolm & Tabor Hartley, 2010).
Chester Barnard’s view
The theory of contribution and inducement are main component of Chester Barnard’s
view’s management theory. The theory of Inducement-Contribution is not as complex as it looks.
It is basically very simple and basic theory that talks about motivation. Cooperative system is the
other name of an organization according to Chester Barnard (Nienaber, 2010).
Source: (Goh, 2013)

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Efficiency versus Effectiveness
Can an organization can be ‘efficient’ without being ‘effective’? To get the answer lets
discuss on the topic Effectiveness versus efficiency. The terms have a same meaning when it
comes to manger but when it is considered from the point of view of success.
Effective Efficient
Doing the right things Doing things right.
Chester Barnard’s says that the companies are worried about only the quality, output, innovation,
sales, creation of value added, cost reduction. These are considered major points to be considered
for the success of a company in economic and social grounds (Isomura, 2010).
While reaching to the desired destination on behalf of the organization, it is must to analyses the
effectiveness and efficiency of the organization along with the capabilities of employees. Chester
Barnard’s considered the Social Transformations in Contemporary Society to choose the staff
and leader of the organization, employee’s identification in organization, decision making, and
psychological attachment consideration (Novicevic, Hayek & Fang, 2011).
Chester Barnard’s is in favors of changing staff attitudes in an organization for the level of
maturity they have. Effectiveness is closely associated with the concept of human capital
management. According to him goal achievement and mission fulfillment can be done by
organizational effectiveness. Organizational effectiveness can be enhancing by better

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correspondence, association, initiative, heading, flexibility and positive condition. Chester
Barnard’s has originated the idea of Total Productive Maintenance, which has been generally
connected in the plants and secured the whole existence of life in each office including
assembling, upkeep, and arranging (Fugate, Mentzer & Stank, 2010).
The structure permitted valuing general execution of the plant, since it secured:
 Entire capability (profitability, quality conveyance, wellbeing, social obligation and
ethics);
 Entire support basis (upkeep counteractive action framework, viability change);
 Entire investment of the workers (the expansion of the capability of the plant relies upon
the inclusion of the staff, paying little attention to the office they have a place with).
As indicated by Chester Barnard’s, framework of Complete Productive Maintenance could
be connected as a device, it cannot be used as the procedure to promise operational possibility
for leaders. Barnard worried the way that effectiveness management instruments and procedures,
for example, benchmarking, time based rivalry, outsourcing, collaborating are gradually
replacing the strategy (Haas, et. al., 2011).
It is an aftereffect of organizations mismanagement which result in failure to convert their goals
into supportable productivity. Efficiency makes link amongst output and input or how effectively
the input are changed into fruitful output.

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To increase the output, the Total Productive Maintenance framework by Porter proposes
the removal of six misfortunes, which are: decreased yield – from start up to stable generation,
process faults, decreased speed, sitting and minor obstacles, set-up and change and apparatus
disappointment (Chiou, Lan & Yen, 2010).
As indicated by Chester Barnard’s there is a contrast between organizational efficiency and
business effectiveness. Business effectiveness reveals the execution of input and output
proportion, whereas organizational efficiency reflects the change of interior process of the
organization. For example: culture, structure and group of organization. Incredible organizational
efficiency could uplift substances execution as far as efficiency, administration, quality and
gainfulness. The Chester Barnard presented seven measurements, for the estimation of
organizational efficiency:
 Procedure of organization; ''Social Transformations in Contemporary Society'', 50
Business structure plan;
 Business and management framework building;
 Development of worker and corporate styles;
 Motivation of employee duty; Development of representative's aptitudes;
 Objectives of subordinates (Green, Skerlos & Winebrake, 2014).
Efficiency and effectiveness are considered as different, yet, in the meantime, they are correlated
with each other. And it is essential for the management to acquire success in both the zones.
Chester Barnard’s propose that ROA is a right measure of organization success, since it uncovers
how gainful association’s resources are in creating incomes. Total resource turnover proportion
measures the efficiency of an organization in order to utilize its benefits for skillfully creates
deals; in this way it can be dealt with productivity as well.
Net revenue proportion is a pointer of an organization's prizing procedures and indicate its
controls the expenses, likewise it is a decent measure for bench marking methods; in this manner
it could be called effectiveness. Therefore, general performance can be estimated by evaluating

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the effectiveness and the efficiency. Efficiency is about asset distribution crosswise over variety
of uses.
Efficiency is not the only criteria to measure organizational success in the competitive and
dynamic business environment. All the relevant aspects should be considered while determining
the organizational success.
Effective yet inefficient
If an organization is effectively managed but because of the poor operational
administration, outcome originated will not match as per the expectations. Ineffective and
inefficient association along with the inappropriate usage of resources will lead to enhance the
cost of production. In relation with attainment of organizational goals and objectives, it is
necessary for the management to manage its resources and employees’ efficiency in an effective
manner so that optimum utilization of available resources could be done. This will help
organization to enhance its market share as well as customer base. In order to remain in the
competitive business market, it is necessary for the organization to create its base strong. Along

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with the base, utilization of available resources should also be taken care. This is significant
because the organizational performance is based over four pillars i.e. context, relevant, structure
and content. Until, these four basic pillars will not be followed, organization will not be able to
manage its works as per the expectations. Thus, desired destination will remain unreached due to
which efficiency of the organization decreases (Tajeddini, Elg & Trueman, 2013).
Cost inefficient associations don't have an appropriate asset distribution management system.
Though, such associations have great plans regrading to general achievements as well as to uplift
organizational image in the target market. Apart from this, cost has been considered as the most
crucial aspect for attaining success and desired goals in the market. It is necessary for the
organization to manage its operations and implement certain controlling and monitoring
measures with relevance to manage the work in an effective and appropriate manner.
Thus, it could be analyzed that effectiveness and efficiency, both are crucial aspects for an
organization. This helps the organization to utilize available resources in an appropriate manner
in order to attain desired goals and objectives within the workplace.
Conclusion
Effectiveness and efficiency are considered as the crucial aspect of organizational
assessment. Effectiveness is a broader concept under which employee satisfaction, quality; value
added services, output and social and economic environment interaction, etc. factors plays
crucial role. In order to enhance organizational efficiency, it is necessary to enhance output with
the help of available resources. Efficiency and effectiveness are considered as crucial aspects for
an organizational success but at the same time, both these terms impact each other.

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References
Chiou, Y.C., Lan, L.W. and Yen, B.T., 2010. A joint measurement of efficiency and
effectiveness for non-storable commodities: Integrated data envelopment analysis
approaches. European Journal of Operational Research, 201(2), pp.477-489.
Fernández, S., 2010. Re-discovering Barnard: the functions of the… leader? Highlighting
Chester Barnard's contributions for the twenty-first century business executive. Journal of
Management History, 16(4), pp.468-488.
Fugate, B.S., Mentzer, J.T. and Stank, T.P., 2010. Logistics performance: efficiency,
effectiveness, and differentiation. Journal of business logistics, 31(1), pp.43-62.
Green, E.H., Skerlos, S.J. and Winebrake, J.J., 2014. Increasing electric vehicle policy efficiency
and effectiveness by reducing mainstream market bias. Energy Policy, 65, pp.562-566.
Haas, R., Resch, G., Panzer, C., Busch, S., Ragwitz, M. and Held, A., 2011. Efficiency and
effectiveness of promotion systems for electricity generation from renewable energy sources–
Lessons from EU countries. Energy, 36(4), pp.2186-2193.
Isomura, K., 2010. Barnard on leadership development: Bridging action and thinking. Journal of
Management History, 16(2), pp.216-232.
Malcolm, S.B. and Tabor Hartley, N., 2010. Chester Barnard's moral persuasion, authenticity,
and trust: foundations for leadership. Journal of Management History, 16(4), pp.454-467.
Nienaber, H., 2010. Conceptualisation of management and leadership. Management
Decision, 48(5), pp.661-675.
Novicevic, M.M., Hayek, M. and Fang, T., 2011. Integrating Barnard's and contemporary views
of industrial relations and HRM. Journal of Management History, 17(1), pp.126-138.
Tajeddini, K., Elg, U. and Trueman, M., 2013. Efficiency and effectiveness of small retailers:
The role of customer and entrepreneurial orientation. Journal of Retailing and Consumer
Services, 20(5), pp.453-462.

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