This paper is part of a continuing program of work by the authors on the administrative history and practices of the Hunter District Water Board which is one of the principal statutory authorities in New South Wales. The program has been generously assisted by the Board. The centre piece of this series is a comprehensive administrative history of the Board since its establishment in 1892, scheduled for publication in 1989. An associated series of papers will cover a range of issues related to this core study. This paper deals with questions of industrial organisation and work practices. Companion papers will cover the Board's relationship with trade, unions, its pricing policies, and its attitudes to major industrial consumers such as BHP. 'Industrial Organisation' analyses questions of work practice and rituals in the day-to-day administration of the Board. It argues that patronage has been a major distorting influence in the organisation of the Board and that the structure created to justify patronage appointments has had a lasting negative impact. After briefly reviewing the history of the Board's creation, the paper examines the divisional structure, the use of temporary staff, the seniority system, the tensions between engineers and clerks, work practice infringements, efficiency and organisational culture. The paper concludes that statutory independence is a fiction useful for Ministers to be able to claim the credits and dodge the brickbats. The paper serves to illustrate how and why industrial relations within public sector authorities differ from, yet are similar to, those in the larger private sector.