Rao VSP & Narayana, PS : Organisation Theory & behaviour. 2nd Revised Ed.. Konark Publishers. 2000
Rao VSP & Narayana, PS : Organisation Theory & behaviour. 2nd Revised Ed..
Konark Publishers. 2000
Systems Theory
Modern organization theory centers around the concept of a system i.e. systems
theory. Chester Barnard was the first to view the organisation as a social system of
cooperative interactions among members- organisation, individuals and customers.
Burns & Stalker [1961] also made use of the system view in their study of
organisations as mechanistic or organic systems.
General Systems Theory [GST] Kenneth Boulding described the systems approach
applicable to all scientific phenomena. He arranged system from simple to complex.
 Transcendental
 Social organisation
 Human beings
 Animals
 Plants
 Cells
 Cybernetic Control
 Clockworks
 Simple/static framework
Systems theory has its roots in the physical and biological sciences. There is no
universal definition of a system. Rao defines it as “a set of interrelated, interdependent
and interacting elements.” It may be mechanical, botanical or social-technical e.g. a
business firm. An organisation is an open, dynamic, multi-goal seeking and
purposeful system that has concreteness and abstraction. The systems approach assists
in understanding modern complex organisations, e.g. by considering the effects of
environmental dynamism on the organisation and vice versa. It examines how the
parts fit together and how the organisation interacts with the environment.
An organisation, like an organism is a system with features such as
 Composed of parts that are interdependent and interacting
 The whole is greater than the sum of its parts- having synergy
 It has an inherent regulatory mechanism
 The system has a hierarchy of levels- each system has a super-system and
subsystem.
 The system has boundaries which are reasonably tight but often fuzzy as well
 It transforms inputs into outputs. This transformation is essential for survival
of the entire system
System may be open or closed; simple or complex; abstract or concrete.
As open system [e.g. all living organisms] they have the following features:
- The import energy and export output
- Are highly dynamic and flexible
- They interact with the environment
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Are characterized by negative entropy which helps them survive by
importing more energy from the environment than is expended
Have a feedback mechanism to maintain a state of homeostasis.
As complex systems, they operate with a large number of components that are not
similar/homogeneous. These component/factors change constantly. They are also
abstract thus comprising ideas and concepts. But an organisation has both concrete
and abstract dimensions e.g. physical materials on one hand and ideas, objectives and
operational policies on the other.
THEORETICAL CONTRIBUTIONS TO SYSTEMS THEORY
Characteristics of Open Systems [OS]: Katz & Kahn- The Ten Commandments
1) Importation of energy to provide a continuous inflow of stimulation from
the external environment
2) Throughput by creating products, processing materials, training and
providing a service.
3) The output. Survival depends on the environment accepting output.
Rejection of output amounts to rejection of the organisation.
4) Systems as cycles of events. Input/output.
5) Negative entropy. An entropic system is a universal law of nature whereby
all organisms move towards disorganization, demise or death. To
survive,the organisation must arrest entropic processes and acquire
negative entropy. This is done by restoring excess energy from the
environment [i.e. profits], acquiring reserves of comfortable margins to
meet organizational uncertainty. Thus the organisation is able to repair and
maintain its structure, avoid death and grow.
6) Inputs of information. This allows the organisation to adjust its course of
action by using feedback-like a thermostat that controls temperature. Such
information provides a corrective device allowing the organisation to keep
on track.
7) Steady state. Importation of energy to arrest entropy creates a steady state
of affairs [as in the case of homeostatic processes that regulate body
temperature]. Any internal/external disruptive factor is countered by forces
that restore the system to its previous state. This is called dynamic
homeostatic process.
8) Differentiation Open Systems move towards well-differentiated
specialisation and elaboration of roles and functions e.g. specialist
departments. Organisations thus move away from primitive forms or
structures.
9) Integration & coordination is needed for the reintegration of differentiated
functions to allow control over organizational activities e.g. through rules
and standards.
10) Equifinality. An organisation can reach the same point through a variety of
paths. Organisations do not have to start from the same place or use the
same techniques to succeed. There are a number of ways to skin the cat.
There is no single best way to design an organisation.
Management should not search for a single rigid solution for problems but should
develop a variety of satisfactory alternatives.
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Rao VSP & Narayana, PS : Organisation Theory & behaviour. 2nd Revised Ed.. Konark Publishers. 2000
INPUTS
PROCESS
OUTPUTS
Feedback
From the above w can extract the following features:
 Interdependence. The parts are interdependent & interacting. No single system
is independent to sustain the whole organisation. Change in one part has
ramificatios for other parts and for the entire organisation.
 Synergism. The whole is greater than the sum of the parts. When put together
the parts have an interactive effect. The interaction of parts creates an effect
greater than the effects of the parts functioning separately/independently e.g.
when working as a team. Each part of the system performs its role and
enhances the performance of the other parts.
 Holism. In considering an organisation, all the parts must be brought into the
picture. A system must be considered as a functioning whole.
 Boundaries. These are rarely impenetrable. They are not rigid but tight.
 Feedback. To keep on course and adapt, feedback is essential. It may be
positive or negative. This concept is central in the theory of control. It enables
the system to gather and evaluate information on its performance and act like a
self-regulating device.
 Cybernetics occurs when feedback adjusts the operation of the system. Such a
model has three-component parts- receptor, controller and effector to receive,
interpret and effect changes e.g. an electric door.
KAST & ROSENZWEIG on SYSTEMS APPROACH.
Systems approach provides a vital philosophical basis for understanding
organisations. According to these two theorists an organisation is an open
sociotechnical system composed of a number of subsystems as follows:
1. Goals & Values. Organizational goals and values are the most important of all
subsystems. An organisation is itself a subsystem of society and so should
achieve goals determined by the environmental supra-system. An organisation
survives only when it achieves this goal- by providing required
goods/services. It must also conform to social requirements.
2. Technical Subsystem covers techniques used in the transformation process.
TSS affects structure as well as the PSS. It is shaped by specialization of
knowledge, machinery and equipment. Technology differs according to the
operations involved.
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Key: [Subsytems]
G&VSS Goals & Values
TSS
Technical
PSS
Psycho-social
SSS
Structural
MSS
Managerial
TSS
SSS MSS
S
PSS
G&
VSS
3. Psycho-social Subsystem. In each organisation individuals and groups interact
to produce goods and services. PSS covers individual behaviour, motivational
aspects & group dynamics; including the emotions, attitude, sentiments etc of
employees. External pressures and forces also influence it. PSS also fifers
between industry and firms.
4. Structural Subsystem covers the way tasks are divided and coordinated in the
organisation. It includes authority relationships, communication networks,
workflows etc. it thus provides formalisation of relationships between
technical and psychosocial systems.
5. Managerial Subsystem sets goals, develops plans/strategies, and establishes
controls.
JOHN KOTTER on System Approach.
Kotter identifies seven [7] key elements in his model of organizational dynamics.
a. Key organizational Processes form the central element in the model. They
include information gathering, communication, decision-making converting
and transforming matter/energy.
b. External Environment comprising the task environment and the wider
environment. Task environment covers competitors, suppliers and regulators.
The wider environment on the other hand includes society, technological
development, political system, laws and the economy.
c. Employees and other tangible assets. An organisation needs resources in order
to function.
d. Formal organizational Arrangements and positions regulate/coordinate the
actions of employees and use of assets e.g. allocating resources, setting
rules/procedures and designing jobs etc.
e. Social System comprises culture and social structure, norms/values of
employees and groups. Social structure covers trust, cooperation, power and
affiliation; informal relationships that arise spontaneously as people work.
These are not written down but can exert considerable influence on members.
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Rao VSP & Narayana, PS : Organisation Theory & behaviour. 2nd Revised Ed.. Konark Publishers. 2000
f. Technology-methods & techniques.
g. Dominant Coalition consists of people who occupy key positions and take
policy decisions, as well as controlling the organisation generally. The
personal characteristics of members of this coalition matters as well as their
interrelationships.
It is important that all the parts fit and work well together to enhance effectiveness.
Employees
Formal
Organisation
Social
System
Technology
Dominant
Coalition
External
Environment
A Model of Organisational Dynamics
Subsystems in the organisation. The organisation is a dynamic system that reacts to &
acts upon the environment. There is no universal way of classifying its subsystems
except for convenience. In addition subsystems overlap in their functions. When one
subsystem fails it has an immediate impact on the other subsystems and the whole.
However every organisation has the following subsystems:
A. Technical subsystem that is responsible for work accomplishment by focusing
on the job [tasks carried out by one person.]. A superior/subordinate
relationship exists. Employees are also significantly affected the social system.
B. Social Subsystem arises from informal relations among employees. Groups
also evolve and develop unwritten rules for conduct. This system provides
psychological cement that binds the organisation and gives members a sense
of satisfaction.
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Rao VSP & Narayana, PS : Organisation Theory & behaviour. 2nd Revised Ed.. Konark Publishers. 2000
C. Power Subsystem. People are [perpetually jockeying for power. Distribution
of power is both formal and nonformal. Power is necessary to transform
decisions into action
Questions
1. What is the systems approach to organization theory? Explain the salient
features of this approach.
2. What do you mean by a system? Distinguish between open and closed
systems; simple & complex system; abstract and concrete systems.
3. What are the essential characteristics of open systems?
4. Explain the concept of subsystem. How does it help in understanding many
interdependencies that exist in any organizational system? Also discus the
power, technical and social subsystems.
5. Compare and contrast various subsystems in an organization
6. Distinguish between the Kast & Rosenzweig approach and the Kotter
approach to organization theory.
The Adaptive Approach
The link between organizational action (decision) and the consequences of that action
is messy and unpredictable as compared to rational decision-making. Thus results of a
decision action are jointly produced by your organization action and what others are
doing. This is an adaptive approach. Two versions of the adaptive approach are game
theory and chaos theory.
Game theory is the study of people making interdependent choices. A game involves
2 people e.g. in competitive pricing. In a game the outcome is jointly produced. In the
game theory perspective, visualize 2 decision makers adapting to each other’s
presence at the same time. Each decides rationally but adaptively.
Chaos theory defines the study of dynamic patterns in large social systems. It
therefore is a descendent of system theory. The focus is on turbulence; the future is
completely unpredictable, present circumstances different from certainty, risk and
uncertainty. Chaos has 3 states – Equilibriums
- Disequilibrium
- Bounded instability.
Only with bonded instability is the organization capable of innovation. Decisionmaking becomes a continual process of adaptation to forces largely beyond a
decision-maker’s control
THE OPEN SYSTEM
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Many approaches emphasis the importance of groups and individuals in organization.
The Open System approach looks at the organization in it entirety. The organization is
composed of a number of interconnected sub-systems. A change in one part imparts
on the other parts of the system and on its overall performance. In changing the parts
therefore we seek to do so which improving overall functions of the organization.
The Open System does not see organization s as systems in isolation but as open in
two ways- open to and interacting with existing environment, and also open
internally, thus interacting with one another. There are clearly defined lines of
coordination and interdependence. But objectives are pursued collectively. Emphasis
is on achieving overall synergy rather than optimizing performance of any one
individual part per see.
There are 4 principals organizational sub-systems (Miller 1967)
1. Organizational goals and values sub-system Goals values should be
compatible with each and with the internal and external environment.
2. Technical Subsystems specific combination of knowledge , techniques,
technology required to function. There must be compatible and appropriate to
its circumstance.
3. Poycho-social sub-system also called its original culture. It’s the fabric of role
relationship, values, norms that bind people and their systems of a immature
society (the organization ) It is influenced by environment , history,
employees, tasks, technology, structure
4. Managerial S/system spans the entire organization and relates organization to
it environment, setting goals , values, developing comprehensive str and
operational plans , designing structure, establishing control process . If this
spans/system fails the whole organization collapses.
Open System takes a holist not a particularistic perspective
Factors acting on the Open System
1. Sub-system are interdependent in order to get optimal outcomes
2. Training as a mechanism for changes is inadequate because it acts on the
individual not the original level. Training gives individual change without
changing the organization.
3. To succeed organization must lap and detect the energy and talent of the
workforce.
However social systems are dynamic and complex and therefore difficult to
describe or analyze. There are many cause –effect –relationships. There is high
level of abstraction.
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