This week we're reading: The Functions of the Executive by Chester Barnard

Because Barnard was talking about ‘work philosophy’ long before offices installed inspirational quotations on the walls and ping pong tables in reception. He was one of the first to stop seeing employees as a resource and to start considering the impact of cooperation and consensus on profitability.

What’s the original thought or argument?

That organisations are essentially formed by two contrasting elements: creativity and leadership. While creativity is the natural output of cooperation, he argues that it is the role of leaders in organisations to direct that creativity towards a central purpose. The ultimate goal is to ensure that employees’ personal purposes align with those of the organisation as a whole.

If you want to look smart, just read

Chapter Two, where Barnard sets out his ‘Theory of Formal Organisation’. He argues that there are three key elements to effective organisations: good communication at all levels; a willingness to serve; and a sense of common purpose shared by all. The point on purpose has not lost its relevance. Companies in The Stengel 50 (which ranks the current top 50 purpose-driven organisations) are on average 400% more profitable than the Standard and Poor Top 500.

You might want to skip

Chapter Thirteen, where Functions of the Executive really shows its age. While the argument that the most enduring organisations maintain a sense of morality is very much in vogue, his specific sense of morality is pretty outdated.

Why trust this author?

Barnard was equal parts businessman and philosopher, enjoying his presidency of a New Jersey telecoms agency for its “long hours of self-absorbed reflection and study.” A man of varied interests, he also served as Assistant Secretary to the US Treasury and founded the Bach Society of New Jersey.

Once you’ve read this you don’t need to read

One of Barnard’s influences, Frederick Winslow Taylor. Writing slightly earlier than Barnard, Taylor was a proponent of scientific management, arguing that organisations exist to squeeze maximum efficiency out of their workforce.

Why should this stay on your bookshelf?

People are increasingly looking for work that confers a sense of purpose beyond making money. Even though it was written in 1938, The Functions of the Executive confirms that purpose-driven employees aren’t just happier at work - they’re more effective too.

What’s the one thing you should do differently after reading this book?

Make sure you keep refreshing your organisational purpose as the world around you changes. According to Barnard, “organisations that accomplish their purpose have no reason to exist”. Purposes don’t need to be absolutely future-proof, but they do need to be bigger and more enduring than a series of short-term goals.

Best quote in the whole book?

“Planning is one of the many catchwords whose present popularity is roughly proportionate to the obscurity of its definition.”

Matt Boffey is the founder of London Strategy Unit, which you can follow on Twitter @LSUsocial