The ‘Moral Factor’: Learning from a Management Classic

Cover of 30th Anniversary Edition (1968) of the Book "The Functions of the Executive" by Chester Barnard
Cover of 30th Anniversary Edition (1968). Harvard University Press

Today many recognize the importance of ethics in management, and particularly in leadership, although some others remain unconvinced. This post presents some insights from Chester I. Barnard (1886-1961), one of the pioneers of management thinking. He wrote The Functions of the Executive (Boston: Harvard University Press, 1938), a book which for decades was widely read and, in my view, remains pertinent in many fundamental aspects.

In this work, the result of a remarkable reflection from a long business experience, including being president of the New Jersey Bell Telephone Company, he introduced an innovative vision of the company which contrasted with what were the mainstream theories of the time.

Barnard’s innovation did not consist of a search for work methods to increase productivity like Frederick Taylor, or of providing principles for effective management like Henri Fayol, but of a reflection on how organizations operate.

He sees businesses as complex systems of cooperation by the people of which they are composed. He was probably the first authors to emphasize the role of leadership, although the centrality of his work was cooperation. He writes: “Cooperation, not leadership, is the creative process; but –he added– leadership is the essential fulminator of its forces.” (p. 259)

According to Barnard, cooperation is conscious, deliberate, and purposeful (p. 4), and requires confidence in the leader. While stressing the role of structure and processes for cooperation, Barnard underlines the need for trust –faith in the executive, in his own words. It is essential for leadership to be constructed on what he calls the “moral factor”. After quoting various organizational elements that favor cooperation, Barnard adds:

“… all these elements of organization, in which the moral factor find its concrete expression, spell the necessity of leadership, the power of individual to inspire cooperative personal decisions by creating faith: faith in common understanding, faith in the probability of success, faith in the ultimate satisfaction of personal motives, faith in the integrity of objective authority, faith in the superiority of the common purpose as a personal aim of those who partake in it.” (p. 259) (emphasis is our)

Barnard emphasized two essential elements in business management: the technical, related with structures and processes, and the ethical, related with leadership.

Barnard’s extensive experience made him aware that achieving effective collaboration is not easy. Moreover, he affirmed that such an accomplishment is not normal, quite the opposite in fact, and it is necessary to provide the means to achieve it. The company’s survival and the development of the people who constitute the organization depend on this, and in this regard, ethics in crucial. He wrote: “…the endurance of organization depends upon the quality of leadership; and that quality derives from the breadth of the morality upon which it rests.” (p. 282) (emphasis is our)

Barnard demonstrated a deep vision of reality. One wonders whether we have advanced in this line. I am afraid that the answer is that we have not, but referring back to classics as Bernard could be highly recommendable for a thoughtful management.