ABSTRACT
In The Functions of the Executive, Chester Barnard, then president of the New Jersey Bell Telephone Company, presented one of the earliest and still most useful theories of the motivational bases for employee acceptance of organizational goals. He described a complex “economy of incentives” consisting of both objective and subjective inducements specific to individuals (material rewards and nonmaterial benefits, such as prestige), and general incentives primarily of an interpersonal nature. Barnard recognized that different people are motivated by different types of incentives or combinations, and that their interests vary over time due to changing environments. He argued that organizations “are probably never able to offer all the incentives that move men to cooperative effort, and are usually unable to offer adequate incentives” (1947, p. 149). Hence, an organization must try to change people’s desires through “persuasion” (including coercion, rationalization, and socialization), so that the incentives it can offer are sufficient to obtain employees’ efforts and contributions.
It will be evident … that in every type of organization, for whatever purpose, several incentives are necessary, and some degree of persuasion likewise, in order to secure and maintain the contributions to organization that are required. It will also be clear that, excepting in rare instances, the difficulties of securing the means of offering incentives, of avoiding conflict of incentives, and of making effective persuasive efforts, are inherently great; and that the determination of the precise combination of incentives and of persuasion that will be both effective and feasible is a matter of great delicacy
(Barnard 1947, p. 158).