Barnard-Simon Theory of Organizational Equilibrium

The most important resource of an organization is it’s people. Barnard (1938) stressed that motivating participants to continue to make contributions is one of the most important activities of management. Simon built Barnard’s observations into the Barnard-Simon theory of organizational equilibrium, which refers to the organization’s ability to attract sufficient contributions to ensure it’s survival (Scott p. 171). The postulates are:

1. An organization is a system of interrelated social behaviors of a number of participants.
2. Each participant receives inducements form the organization for which the participant makes contributions.
3. The participant will continue as long as her or his perception is that the inducements are higher than their contributions.
4. The contributions from all the participants provides the pool of resources from which the organization manufactures the inducements.
5. Thus, an organization is “solvent” only as long as the contributions are sufficient to provide inducements necessary to sustain contributions.

This theory borders on tautology, and it’s hard to define both the pool of inducements (both material and non-material), their particular value to an individual, and the relative value and type of contributions made.