Chester Barnard: Informal Organizations and Acceptance Theory

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  • 0:05 Acceptance Theory to Authority
  • 1:03 Informal and Formal…
  • 4:01 Water Cooler Culture
  • 6:08 Informal Groups and…
  • 7:39 Lesson Summary
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Lesson Transcript
Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

Expert Contributor
Joseph Shinn

Joe has a PhD in Economics from Temple University and has been teaching college-level courses for 10 years.

Chester Barnard believed that formal organizations are made up of informal groups. These informal groups evolve to become the informal organization. The group's beliefs and values establish the organizational culture and determine, to a large extent, formal acceptance of authority.

Acceptance Theory to Authority

Management theorist Chester Barnard believed organizations need to be both effective and efficient. Effective means meeting organizational goals in a timely way. Efficient, in his opinion, means the degree to which the organization can satisfy the motives of its employees. In other words, the organizational goals will be accomplished and authority will be accepted when workers feel satisfied that their individual needs are being met. This is known as the acceptance theory of authority.

Acceptance theory of authority states that a manager's authority rests on workers' acceptance of his right to give orders and to expect compliance. Workers have to believe that the manager can legitimately give orders and there is a legitimate expectation that the orders will be carried out. There are a few reasons for this expectation:

  • Workers will be rewarded for compliance
  • There will be discipline for non-compliance
  • Workers respect the manager for his experience

Informal and Formal Organizations

Organizations are made up of groups of individual workers. Naturally, these individual workers form informal social groups that become the informal organization. The informal organization exists within a larger formal organization. Let's take a look at Cheap's Variety Store to gain a better understanding of how informal groups and acceptance theory work together.

Cheap's management likes to keep things professional at all times. There is a hierarchy or chain of command for each department. Formal organizations operate under a set of rules and policies designed to carry out the organizational purpose, like meeting financial and production goals. A formal management-employee relationship dictated by hierarchy exists. Work flows from top-management to workers through hierarchical channels.

Formal organizations operate under a set of rules and policies.
formal organizations

At Cheap's, the chain of command starts with the general manager, then department managers, and then the salespeople. Cheap's Variety Store houses several departments. Each department is staffed with a manager and a few salespeople. Managers assign tasks to employees, and it is expected that employees will complete the work. Some managers reward employees for accomplishing all of their goals by giving them extra time off or an extra break. Other managers are less generous with rewards. Some even threaten punishment for a less-than-productive day.

Randy, the shoe department manager, likes to reward employees by giving them lots of praise for a job well done. He also shares sales goals and outcomes with the staff so they understand the reason for special promotions. This makes his employees more apt to accept the tasks he delegates. They enjoy working with him because he communicates the purpose of their work and includes them in the celebration when the department hits their goals.

It is not uncommon to see a group of cosmetic sales girls hanging around the mirror chatting away, testing the newest lipsticks while work piles up and shelves are empty. But who can blame them. Liza, their manager, is not very qualified to manage the department. She is very young, nearly half the age of the others, and has no retail experience. She doesn't even have a knack for applying makeup.

Managers assign tasks to employees.
managers assign

Sales goals are never shared with the girls. It's just work, work, work! When the girls ask Liza about a new sales promotion, Liza just tells them to get back to work. Liza requires the girls to move the displays around the department every three hours. When the girls question why, Liza dismisses their concerns completely. As a result, work doesn't get done and sales are very low. There is always conflict in cosmetics.

Cheap's allows managers to direct work any way they see fit. But as we witnessed in the cosmetics department, not all employees perform their jobs well. Some do the work while others loaf around.

The informal organization is structured much differently. It is the personal contacts and interactions between workers that form into small groups. These informal groups of workers form their own organization within the larger organization and have a powerful impact on the acceptance of formal authority.

Water Cooler Culture

Informal organizations exist everywhere on the job. When workers hang around the water cooler to talk about last night's big game or where to go to lunch, they are really doing much more than chit-chatting. They are bonding together to form and sustain the informal organization.

When employees socialize at work, they are bonding together to form the informal organization.
informal organizations

The organizational culture evolves from the beliefs and values the small informal groups cherish. This social interaction over time forms into cohesive relationships necessary for people to work together. And it creates an independence from the formal authority because the informal organization is not governed by rules and policies.

The break room is the place where salespeople at Cheap's go to talk about work. The shoe salespeople talk about their sales goals and share ideas. The cosmetic girls talk about Liza and her poor management skills. Each conversation the groups have builds a strong union between each of the salespeople.

This water cooler culture is necessary. Its function can be beneficial to the formal organization in that it:

  • Provides individuals with social status not experienced in the formal organization
  • Promotes communication between group members
  • Influences and regulates behavior inside and outside the group
  • Motivates people to want to work together
  • Leads to new and innovative idea sharing

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Additional Activities

Additional Questions about Chester Barnard:

  1. Compare and contrast formal and informal work environments. Consider an example of each type of work environment. Describe these two examples, including how employees interact with each other and the ways that tasks get completed. What are the advantages and disadvantages of the example of the formal work environment? What about the advantages and disadvantages of the informal work environment example?
  2. Recently, more and more businesses are adopting a work-from-home environment. This arrangement limits or eliminates the "water cooler culture." Using this culture as your main argument, discuss the long-term disadvantages that a company might experience as a result of letting their employees telework.
  3. Think about an informal group of work colleagues that you interact with. Does this group include anyone in your organization that is at a higher step on the organizational hierarchy? What types of conversations do you have with this group? If your group does not have a person who works above you, does your group help make your job more enjoyable? How or how not? If the group does include someone higher than you, do you feel that your ability to speak freely is limited? Do you think you would enjoy your interactions with this group more with only your direct peers at work? Why or why not?

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