Management from the
perspective of systems theory
Peter Andras and Bruce G Charlton
University of Newcastle
peter.andras@ncl.ac.uk
bruce.charlton@ncl.ac.uk
Overview
• Management theories
• Abstract communication systems
• Management systems
• Discussion
• Conclusions
Management theories
Management phenomena
• Usual theories focus on phenomenological
aspects:
• Types of behaviours of managers
• Roles of managers
Theories
• Fayol: planning, organising, commanding,
coordinating and controling
• Mintzberg: informational, decisional and
leadership roles
Charisma
• Charismatic leader:
• empathically communicate with a large group of
followers
• motivate followers to overcome temporarily their
individual limitations
• find convincing candidate solutions of difficult
complex problems in relatively short time
• Hard to treat in the context of usual theories
Complexity vs. standardisation
• Management theories typically praise
standardisation and aim to decrease
complexity
• Some more recent theories claim important
roles for complexity
• Which is better ?
Why isn’t this good ?
• Preferred viewpoint
• Imposed organisational values
 restricted validity
Abstract communication systems
Communications
Sender
Referenced
communications
Signal
Receiver
Communication systems
• Communication system: dense set of interreferencing communications
• The communication units are NOT part of the
communication system
Communication
system
System and environment
• All other communications outside the
system constitute the environment
• System: communicates about itself, and in a
complementary sense about the
environment
• System: defined by its own language = rules
of referencing
Example: science
• Scientific communications:
• Communications and notes about experimental measurements
• Scientific papers
• Tables of scientific data
• Scientific communications refer to other scientific
communications
• Science: the dense set of inter-referencing
scientific communications
• Science language – is part or is it not part of
science
Reproduction and expansion
• Systems reproduce by generating new
communications according to their own
rules
• Environmental constraints
• Systems expand if they describe/predict
successfully their environment
• Competition by expansion
Example: economy
• Low inflation economy – the monetary system
describes well the economy and allows
appropriate pricing of goods and services
• High inflation economy – mismatch between the
actual economy and the one predicted/described
by the monetary system
• Low inflation economies follow stable growth,
high inflation economies fluctuate and may recess
Limits of expansion
• Length of non-random sequences of
referencing
• Longer sequences – better
description/prediction of the environment
p1
p1’
p2
p2’
p3
p3’
p4
p4’
Example: companies
• Company 1: paper handling of data
• Company 2: electronic handling of data
• More reliable electronic data handling
allows better analysis and prediction of the
environment and faster growth for
Company 2
Subsystems and simplification
• Subsystems: restricted referencing rules
 dense cluster of inter-referencing
communications following stricter rules
within the system
• Simplification: reduced set of
communication symbols  less ambiguity
in referencing
• Subsystems, simplification  faster
expansion of the system
Example: small and large companies
• Small company: no separation between
types of activities (marketing, HR, strategy)
• Large company: many separate specialized
units, speaking specialised simplified
languages
• Large companies grow faster in average
than small companies (below the limit of
their growth)
Memory
• Memory: reproduction of earlier
communications
• Memories allow direct reference to earlier
communications  extension of referencing
sequences  faster expansion
• Example: written text – memory of spoken
words  expansion of science with the
advent of printing
Information subsystem
• Newly generated memory communications
referencing other memory communications
• Subsystem of memory communications
 information subsystem
• Information subsystem increases the
expansion potential of the system
Example: developing company
• Self-employed: small scale business
• Products, services: storage of information
 planning, organising and scheduling
subcontractors: information subsystem
 company
• Company: faster growing larger scale
business
Identity subsystem
• Information subsystem: communications about
memories that can be referenced as memories
• Identity subsystem: information subsystem that
generates communications, which are referenced
regularly and guide the generation of correct
communications, assuring the continual
reproduction and expansion of the system
• Systems with identity subsystem reproduce and
expand faster than systems without such
subsystem
Example: rule of law
• Politics – memory: laws  legal system
• Rule of law: the legal system changes slowly and
provides stable references for political
communications over long periods  the legal
system acts as an identity subsystem for the
political system
• Frequently changing legal system: no stable
references for political communications  there is
no identity subsystem for the political system
• Countries with rule of law develop faster than
countries with frequently changing legal system
Management systems
Organisations
• Organisation: system of human
communications (including
communications with and using artefacts)
• Memories of organisations: products,
services, contracts, manuals, data
collections, etc.
Management and power
• Phenomenological link between
management and power/authority
• Systems theory: management = operations
with memories of the organisation =
generation of new memory communications
that reference other organisational
memories
Management: information subsystem
• Management: system of memory
communications  information subsystem
of the organisation
• Organisations with management subsystem
reproduce and expand faster than
organisations without management
Phenomenology: information
processing
• Management: information subsystem:
• Collection of information about the environment and
the organisation
• Processing of information within the organisation
• Generation of information to guide activities of
organisation and for the outer world
Management: identity subsystem
• Management: information subsystem

provides regular references for organisational
communications (e.g., handbooks, contracts,
regulations)
 management turns into an
identity subsystem
• Organisations with management acting as identity
subsystem reproduce and expand faster than
organisations without such management
subsystem
Phenomenology: identity operations
• Management: identity subsystem:
• Identity definition: what is and what is not the
organisation (e.g., regulations)
• Identity checking: do actions within the organisation
comply with the identity definitions (e.g., evaluation
reports)
• Identity enforcement: assuring that actions and
behaviours within the organisation comply with
identity definitions (e.g., execution of plans,
disciplinary actions)
Management subsystems
• Subsystems:
•
•
•
•
Marketing
Financial management
Strategic management
Human resources management
• Subsystems have their own restricted
language and facilitate the reproduction and
expansion of the organisation
Discussion
Growing management
• Management usually grows faster than the
rest of the organisation
• Management theories do not support usually
this excessive growth and intend to reduce it
• Common sense logic is also against overbureaucratisation
Management should grow
• Systems theory says that management
should grow in order for the organisation to
grow
• The organisation may grow in many case by
growing its management and this growth
triggers further growth of the organisation
Maladaptive growth
• Not all growth is good
• Growing management is a response of the
organisation system under stress
• Lack of competition allows maladaptive
growth of management
Charismatic leaders
• Charismatic leader:
• empathically communicate with a large group of
followers
• motivate followers to overcome temporarily their
individual limitations
• find convincing candidate solutions of difficult
complex problems in relatively short time
• Hard to treat in the context of usual theories
Changing organisation
• Organisations of which environment
description shows significant mismatch
with their actual environment
• Such organisations need major changes
• Charismatic leaders are good choice to lead
such changes
Charismatic leadership
• Systems theory: charismatic leaders are good in making
some sense of complex situations  they generate
communications that induce a rearrangement of the
organisation system
• Charismatic leaders may decrease slightly the complexity
of problems, leading to better match between the
description of the environment and the actual environment
• Such innovations may not be very useful in well
established organisations without major mismatch between
their environment description and their actual environment
• Charismatic leaders should be appropriate in organisations
living in constantly rapidly changing environments
Complexity vs. standardisation
• Many management theories argue in the
favour of standardisation
• Some theories argue for maintaining
complexity in organisations
Complexity
• Systems theory: environment is infinitely
complex
• Organisational complexity: to what extent is
the infinitely complex environment
described by the organisation
• Proxy measure: size of the organisation
Standardisation and growth
• Standardisation  simplification  faster
system reproduction and expansion
• Standardisation leads to faster growing
larger and more complex system
• Also possible to have bad standardisation
Good and bad complexity
• Generally increased system complexity is
good, and appropriate standardisation leads
to increased organisational complexity
• Complexity may grow also by slow
expansion of the organisation which does
not fit to its environment (e.g., maladaptive
growth in the lack of competition)
Conclusions
Conclusions
• Abstract communication systems theory can be
applied to analyse organisations and management
– great advantage: no fixed phenomenological
viewpoint
• Management: information subsystem of the
organisation  identity subsystem of the
organisation
• Applications: management growth, charismatic
leadership, complexity vs. standardisation