LECTURE 4

ORGNIZATIONS AS SYSTEMS

Meaning of organization systems

Organizational systems are the structure a business uses to organize its functions and assign
responsibilities to employees. Organizational systems can become increasingly complex at large
corporations, but small-business owners use several common organizational models to run their
companies, refining them as they grow.

Most organizations use the following systems:

Flat Organizational System

As entrepreneurs start companies, they often rely on a loose organizational structure, taking
overall responsibility for most areas, but assigning different employees to different functions. For
example, the owner of a landscaping company might make all of the decisions for a business but
assign one employee to help with marketing, another to manage the employees and another to
bid jobs and oversee the work. Employees in a flat organizational structure often do not have a
manager or supervisor other than the owner of the company. This is known as a flat
organizational system because there are no layers of management.

Hierarchical Structure system

As companies grow, there is often too much work for an owner to do by himself. At this point,
the owner starts appointing managers and creating a hierarchy, or totem pole. Using our
landscaping company with the flat organizational structure as an example, the person in charge
of marketing might become responsible for creating and managing the department’s budget,
overseeing a staff member who handles promotions and hiring contractors, such as a graphic
designer and webmaster. The staff who do the actual landscaping work in the field now report to
the employee supervisor, instead of to the owner.

Departmental system

Another way to organize a business is to create an organizational system based on the different
functions within a company. These functions typically include marketing, finance, office
administration, human resources, information technology and production. As the company
grows, it also uses a hierarchical structure, with department directors, managers and staff
members. To coordinate the efforts of all the departments and keep information about them
centrally located, a company might develop what is known as a “C Suite,” which consists of a
chief executive officer, chief operating officer and chief financial officer.

Divisional Systems

When a company has multiple products or businesses, it might operate using a divisional system.
For example, a sporting goods company might make tennis, golf and volleyball products. In this
type of structure, each division might operate using its own production and marketing functions
because these are unique to the type of product or service the division creates. All of the
divisions might share general functions, such as human resources, accounting and information
technology.

Close and Open Systems

Systems theory is the interdisciplinary study of systems in general, with the goal of elucidating
principles that can be applied to all types of systems at all nesting levels in all fields of research.
Systems theory can reasonably be considered a specialization of systems thinking; alternatively
as a goal output of systems science, with an emphasis on generality useful across a broad range
of systems.

A system that interfaces and interacts with its environment, by receiving inputs from and
delivering outputs to the outside, is called an open system. They possess permeable boundaries,
that permits interaction across its boundary, through which new information or ideas are readily
absorbed, permitting the incorporation and diffusion of viable, new ideas. Because of this they
can adapt more quickly to changes in the external environment in which they operate. As the
environment influence the system, the system also influence environment. Allowing the open
system to ultimately sustains growth and serves its parent environment, and so have a stronger
probability for survival.
Examples of open systems: Business organization, Hospital system, College or University
system.

Conversely, a closed system is more prone to resist incorporating new ideas, that can be deemed
unnecessary to its parent environment and risks atrophy. By not adopting, a closed system ceases
to properly serve the environment it lives in.

The Conversion process

1. Choice.

Employees should be able to make a choice to give the organization their best as opposed to
being reminded.

2. You'll never stop learning.

Employees should continue learning through staff development and on the job so enhance their
expertise.

3. Be comfortable with yourself at your work place.

Employees should have job satisfaction for them to be comfortable at their work places. There
are many ways jobs can yield job satisfaction through organizations initiative or individual
initiative.

4. Be honest.

Be honest with yourself and your organization during the conversion process. Share how you're
feeling about the work experience, including any misgivings you have.

5. There is no one type employee.

Everybody can fit in any organization and therefore employees should not fear working for any
organization as long as they have the basic skills the rest they can learn.

6. You might not enjoy all of it.

Some of us appreciate the parts of the organiation, while others may not. Just because some
things speak to you more than others doesn't mean the organization, as a whole, is wrong for
you. Each of us takes some time to find our paths.

7. Experimenting with tradition is fun.

Experiment with the organization culture and things will fall into place.

8. There are opportunities everywhere.

Opportunities are everywhere in any organization and therefore don’t shy away thinking that
there are better organizations or worse organizations than where you are.

9. Every experience is unique.

Likely the biggest misconception about conversion is that the process is the same for everyone.
It's not! For some, the process is short, a matter of months or just a year. Others may prepare
much longer.

Characteristics of Open System

Open Systems Theory

It defines the concept of a system, where "all systems are characterized by an assemblage or
combination of parts whose relations make them interdependent" .As one moves from
mechanical to organic and social systems, the interactions between parts in the system become
more complex and variable.

In mechanical systems the parts are highly constrained. In social systems, the connections are
loosely coupled. Also important is the flow of materials, energy, and information across system
boundaries separating the system from its environment. Simpler systems transmit primarily
energy, while higher order systems transmit information.

Open systems like organizations are "multi-staged : many heads are present to receive
information, make decisions, direct action". Individual and subgroups form and leave coalitions.
Boundaries are amorphous, permeable, and ever changing. But the system must exchange
resources with the environment to survive.

The degree of complexity in systems is described as:

Frameworks -- systems comprising static structures (crystals, animal anatomy)

Clockworks -- simple dynamic systems with pre-determined motions (clocks, solar system)
Cybernetic Systems -- capable of self-regulation with an externally prescribed target
(thermostat)
Open systems -- self-maintenance through exchange of resources with environment (cell)
Blueprint-growth systems -- reproduce through sees or eggs
Internal-image systems -- systems have detailed awareness of environment (animals)
Symbol-processing systems -- self-consciousness and language (humans)
Social systems -- actors who share common order and culture
Transcendental systems -- "absolutes and inescapable unknowables"

Open systems also engage in two main sets of system processes. Morphostasis processes in
organizations tend to preserve the systems given form through socialization and control
activities. Morphogenesis processes elaborate or change the system, often by becoming more
complex or differentiated.

Characteristics of open systems:

1. Importation of energy from the environment (resources, people, etc.)
2. Throughput (transform resources avialable to them).
3. Output (export some resources to the environment).
4. Systems as cycles of events
5. Negative entropy (through input of energy/resources)
6. Information input, negative feedback, and a coding process. (to maintain steady state).
7. The steady state and dynamic homeostasis (and a tendency toward growth to ensure survival).
8. Differentiation and specialization.
9 Integration and coordination
10. Equifinality (many paths to same end).

Classes of Organizational Sub-Systems

Organizational subsystems are smaller group of employees that work together within the larger
organizational system. Examples of subsystems include departments, programs, projects, teams,
and informal collections of employees that work together to complete certain work processes.
Identifying these groups within your larger organization helps you establish organizational
structure and manage work processes at lower levels.

System Basics

Organizational systems include people, processes, formal and informal rules and other elements
that create a hierarchy for structure and communication. The products, service and bottom line
results generated within a business are a reflection of the effective setup of your organizational
system. Development of communication flow, structured workplaces and cultural norms and
values distinguish your system from others. Within your bigger system are the aforementioned
types of subsystems, which each have their own people and ways of doing things.

Subsystem Types

Departments and divisions are common subsystems carved out within an organizational system
through the use of an organizational chart. Manufacturers may use divisions to identify different
facilities and employees that work on different production processes. Project groups or work
teams are smaller subsystems that involve people working together on a single project or on
ongoing work activities in a specific area. The informal subsystems are typically less defined by
organizational structure and can involve temporary or permanent interaction between employees
in different departments or work groups. Informal, social groups in the organization are also
subsystems.

Planning

The first step in planning to maximize your people and processes in each organizational
subsystem is creating your structured organizational chart. You then outline the objectives,
strategies and basic work flow processes for each subsystem. Each subsystem has its own
objectives, strategies and techniques that ultimately should align with the mission and objectives
of the organization. A sales department, for instance, has goals and strategies designed to sell
more products or services. A production team has objectives centered on maximizing quality and
efficiency in production. You usually base resource allocation, including budgets, to each
subsystem based on its objectives and importance to the bigger organizational system.

Effective Functioning

Success or failure within an organizational subsystem often affects the entire organization. Just
as your organization needs direction with established policies, job descriptions and effective
management, so does each subsystem. The more unique the objectives and culture of the
subsystem relative to the organization, the more important effective management and formalized
procedures are to its success. Leaders of finance or accounting department, for instance, must
emphasize quality control and accuracy in bookkeeping and financial reporting. This helps keep
the company out of trouble. The accounting department also has controls and policies unique to
that subsystem