Organization as systems - Management theory

Organisations as
Open Social
Systems
• Organisations function as open
social systems, interacting
continuously with their
environment.
• We'll explore key characteristics of
open systems and their
application in understanding
organisations.
• Insights from theorists will be
used to explain the dynamics of
systems within organisations

Introduction to Organisations as Systems
• Organisations are not isolated entities; they are embedded within and interact with their external environment.
• Put at its simplest, a system is a collection of interrelated parts which form some whole.
• By examining organisations as systems, we gain a holistic view of how inputs, processes, and outputs are connected.
• A system is a set of interconnected components working together towards a common goal.
• Examples range from biological systems like the human body to technological and social systems.
• Closed systems operate in isolation, whereas open systems, like organisations, rely on continuous input from their
environment.
• For instance, an airline company depends on external factors like fuel, regulations, and customer demand to function.

Closed vs. Open Systems
• Organisations as open systems interact with their environment to
receive inputs, such as resources, people, and information, which
they transform into outputs—products or services.
• The key components include:
o Inputs: Materials, financial resources, and human capital.
o Throughput: Processes that convert inputs into usable outputs.
o Outputs: Goods or services that are returned to the environment.
• Example: A tech company using raw materials and human skills to
produce cutting-edge software.
• In relation to an organisation, the inputs include people,
materials, information and finance. These inputs are organised
and activated so as to convert human skills and raw materials into
products, services and other outputs which are discharged into
the environment.

Role of the
Environment
• Influence of External Environments
• Economic conditions affecting business operations
• Customer preferences shaping market demand
• Technological advancements driving innovation
• Legal regulations imposing compliance requirements
• Adaptation to Environmental Shifts
• Importance of quick adaptation for success
• Examples of adaptation in different industries
• Retail businesses innovating to compete with online competitors
• Manufacturing firms adjusting to new regulations
A key feature of open
systems is their
interdependence on the
environment, which may
be relatively stable or
relatively uncertain at a
particular point in time. This
feature is of
considerable importance to
business enterprises which
need to adapt to the
changing
fortunes of the market
place if they are to flourish

Interdependent Sub-Systems
• Most systems can be divided into sub-systems. For example, the human body - a total system -
encloses a number of major sub-systems, such as the central nervous system and the
cardiovascular system, to name but two. Organisations have their sub-systems as well, eg
production, marketing and accounting sub-systems.
• The boundaries between subsystems are called interfaces. These are the sensitive internal
boundaries contained within the total system, and they will be referred to again shortly. In the
meantime it is important to consider a few points about system boundaries.
• An organisation's boundaries are defined as much by corporate strategy as by actual fact. This is
not so for all systems.
• In physical or biological systems, the boundaries are there to be seen, and there is no problem
distinguishing one motor vehicle, or one human being, from another, for example. In such systems
it is also easy to identify boundaries between the total system and its sub-systems.
• For example, the gearbox of a motor vehicle is a clearly recognisable sub-unit of the whole vehicle.
• In the same way the cardiovascular system in the human body is a recognizable sub-system of the
whole body. These boundaries are matters of fact. For organisations the issue is not quite so
straightforward.

Interdependent
Sub-Systems
• Organisations are composed of several interdependent sub-
systems, such as production, human resources, marketing,
and finance, all working together to achieve the overall
organisational goals.
• These sub-systems need to communicate effectively to
ensure efficiency and alignment with the organisation’s
mission.
• For example, the finance sub-system manages the budget,
while the marketing sub-system ensures the products are
reaching the right customers.

System Boundaries
• Boundaries define where the organisation ends and its environment begins. These boundaries are often shaped by
decisions regarding what activities are kept in-house versus outsourced.
• Internally, boundaries separate different departments or sub-systems, such as HR or marketing.
• For example, a firm may decide to outsource its IT department, defining its external boundary.

The Importance of
Boundary
Management
• Managing boundaries effectively involves ensuring smooth
transitions between internal sub-systems and external
stakeholders.
• Employees working at boundaries (e.g., sales, public
relations) are key to managing external interactions, while
others (e.g., accountants, project managers) focus on
integrating internal processes.
• A clear example is an HR department managing recruitment
(external boundary) while working with internal teams to
ensure smooth onboarding (internal boundary).

Open and Closed Sub-Systems within
Organisations
• Not all sub-systems in an organisation are
equally open. For instance, the R&D
department is highly open to new ideas and
trends, whereas the finance department
might be more rigid and follow structured,
closed processes.
• Open sub-systems like marketing or product
development need to be flexible and
responsive to external market demands.
• Closed sub-systems like production follow
established processes to ensure efficiency and
consistency.

Overview of Katz
and Kahn’s Model
• Katz and Kahn’s model describes organisations as systems that import
energy, transform it, and return products or services to the
environment.
• Their view of organisations has had a considerable influence on the
developments of systems approaches to organisation theory. Katz and
Kahn saw social structures as essentially contrived systems, where the
forces that hold them together are psychological rather than biological.

Katz and Kahn’s Model
– Five Subsystems
Production or
Technical sub-systems.
These are concerned
with the
accomplishment of the
basic tasks of the
organisation
(production of goods,
provision of services
etc).
Supportive sub-
systems. These are the
systems which procure
the inputs and dispose
of the outputs of the
production sub-system.
They also maintain the
relationship between
the organisation as a
whole and the external
environment.
Maintenance: sub-
systems. These are
concerned with thei
relative stability or
predictability of the
organisation. They
provide for the roles,
th;e rules and the
rewards applicable to
those who work in the
organisation.
Adaptive sub-systems.
The first three systems
above serve the
organization as it is. The
adaptive sub-systems
by comparison are
concerned with what
the organisation might
become. They deal with
issues of change in the
environment, eg as in
marketing, and
research and
development.
Managerial Sub-
systems. These
comprise the
controlling and
coordinating activities
of the total system.
They deal with the
coordination of
substructures, the
resolution of conflict,
and the coordination of
external requirements
with the organisation's
resources. An important
managerial sub-system
is the authority
structure which
describes the way the
managerial system is
organised for the
purposes of
decisionmaking and
decision-taking.

Key
Characteristics
of Open Systems
• Cyclic Nature
• Process repeats with continual adjustments and evolution
• Negative Entropy
• Storing energy or resources to prevent decline
• Feedback
• Continuous evaluation of outputs for adaptation and improvement
• Steady State
• Maintaining dynamic equilibrium with the environment
• Differentiation
• Growth leads to more specialized sub-systems
• Equifinality
• Multiple ways to achieve the same outcome, offering strategic flexibility

Developments
in Systems
Theories
• Overview of Pre-1960s Theories:
• Classical/Traditional School:
• Focus on organizational design as a rational
structure.
• Emphasis on mechanistic approaches to
management.
• Human Relations/Social Psychological School:
• Focus on individual needs and humanizing the
workplace.
• Limited exploration of the organization as a whole.
• Key Issues:
• Failure to address the balance between
organizational structure and individual needs.
• Conflict resolution overly reliant on motivation and
leadership without structural considerations.

Shift to Systems
Approach -
Introduction to
Systems Theorists
• Recognize Organizations as Complex Social Systems
• Organizations are viewed as intricate networks of
relationships
• Emphasis on the complexity and interconnectedness
within organizations
• Focus on Interdependent Variables Influencing Behavior
• Examines how different factors within the system affect
each other
• Highlights the importance of understanding these
interdependencies

Shift to Systems Approach - Key
variables in Systems Approach
oPeople: Individuals and groups within the organization.
oTechnology: Technical requirements of work.
oOrganizational Structures: Frameworks that support functions.
oEnvironment: External factors affecting the organization.
• Comparison to Earlier Theorists:
oSystems theorists study relationships between multiple variables
rather than isolating them.

Contingency Approach
• No "One Best Way":
• Evidence suggests multiple effective organizational designs.
• Organizations must adapt to prevailing conditions for viability.
• Implications for Managers:
• Continuous adaptation may feel daunting but is necessary.
• Offers potential for optimal organization design.

Contributions of the
Tavistock Researchers
• Rice's View of Industrial Systems:
• Definition of industrial systems as
open systems.
• Two Main Systems:
• Operating System: Import,
conversion, and export of
goods/services.
• Managing System: Control,
decision-making, and
communication.
• Importance of Managing System:
• Coordination of interaction among
systems and sub-systems.

Handy’s Modern
Analysis
• Comparison of Rice and Handy:
• Handy's additional systems: adaptive,
maintenance, and information systems.
• Clear focus on managing system components
in modern analysis.
• Significance:
• Helps to pinpoint essential functions of
management in organizations.

Findings from
Ahmedabad
Studies
• Effective Primary Task Performance
• Crucial for overall satisfaction
• Voluntary Cooperation
• Often underestimated in work design
• Whole Task Completion
• Increases individual effectiveness
• Ideal Work Group Size
• Approximately eight members for optimal success
• Work Effectiveness and Social Relations
• Positive correlation observed
• Group Autonomy
• Reduces counterproductive supervisor interference

Implications for Work
Design
• Incorporation into Current Work Design Ideas:
• Must meet social and psychological needs
• Aligns with Herzberg's concepts of motivation and
job enrichment
• Takeaway
• Human factors must be integrated into
technological changes

Environmental
Factors in
Systems
Theory
• Classification of Environments by
Emery and Trist
• Placid, Randomized
 Unchanging and homogeneous
demands
• Placid, Clustered
 Unchanging with clustered
threats/rewards
• Disturbed, Reactive
 Competition and hindering tactics
among organizations
• Turbulent Field
 Rapidly changing environment
requiring frequent adaptation

Turbulent Field
Analysis
• Focus on Turbulent Fields:
• Increasing prevalence of turbulent
environments.
• Formal bureaucratic structures may be
inadequate.
• Flexibility Challenge:
• Organizations must develop more flexible
structures to survive.

The Tavistock Group's Influence
• Pioneering Research in Open Social Systems
• Groundbreaking studies in the field
• Innovative approaches to social systems
• Influence on Understanding Organizational Dynamics Globally
• Impact on global organizational theories
• Enhanced comprehension of organizational behavior

Katz & Kahn's Systems Perspective
• Open Systems Approach:
• Social structures as contrived systems influenced by psychological
forces.
• Social systems are more variable and harder to define than biological
systems.
• Identification of Sub-Systems:
• Advocated for an open system approach with five key sub-systems.

Five Key Sub-
Systems
• Five Key Sub-Systems:
• Production/Technical: Basic tasks of the
organization (e.g., production of goods).
• Supportive: Procures inputs, disposes of
outputs, maintains external relationships.
• Maintenance: Ensures stability, provides roles,
rules, and rewards.
• Adaptive: Focused on organizational change
and development.
• Managerial: Coordinates activities, resolves
conflicts, aligns resources.
• Role of Norms and Values:
• Norms guide behavior, while values represent
the organization's culture.

Organization as systems - Management theory

More Related Content

Similar to Organization as systems - Management theory (20)

More from ssusere2716a2 (7)

Recently uploaded (20)

Organization as systems - Management theory

Editor's Notes