Modern Theory of Organization
The Modern Organization Theory describes organizations as an open social system that interacts with the environments to survive, known as the Systems Theory Approach. The System Theory Of Management approach is an external factor which measures the effectiveness based on long-term sustainability or growth.
A significant application of Systems Theory is in Business Organizations to elucidate a particular approach to management.. The Modern Organization Theory was not originally a business theory but was proposed during the 1940s.
Modern Organizational Theories is divided into two major types – Systems Theory and Contingency Theory. In this article, you will comprehend Systems Theory and its contributions and criticisms in a detailed manner.
System Theory of Management
The Systems Theory was proposed during the early 1960s. The Theory holds a conceptual and analytical base, and thus the system presents a great significance on the empirical research data.
In simple words, Systems Theory considers organizations as a network of systems. A system can be either an organized or complex whole, that is, it can be referred to as a combination or an assemblage of things or parts that comprise a complex unitary whole.
(Image will be Uploaded Soon)
A system comprises different parts known as the subsystems, which are interrelated to one another. Further, the various subsystems are arrayed based on a particular scheme so that the complete system is more than a summation of the various parts. This ensures the system's efficient functioning and secures every system with a boundary that separates it from its environment.
Organizational Systems and Its Environment
There are two types of organizational systems:-
Open Systems: Open Systems interact with their environment, and all living systems fall under this category.
(Image will be Uploaded Soon)
Closed Systems: Closed Systems hold no interaction with their environment, and all non-living systems fall under this category.
An organization is said to be an Open System if it incessantly interacts with its environment. Therefore, to understand the working of an organization, one must identify its boundary and through the organization's interaction with its environment as an input-output model. An organization's inputs are information, energy, and materials that an organization takes from its environment. The input consumed is then transformed with machines and people's help and then supplies the output to the environment.
An organization comprises multiple subsystems like Social subsystem, Technical subsystem, and more. A few of these subsystems are independent and do not rely on the interlinking through any other processes.
Hence, the Systems Theory involves the study of an organization and identifies four major factors-
The nature of Interdependence between the parts of the system
The strategic parts
The lists of the goals that the system is trying to approach
The list of any systems or processes which link the parts of the systems together
Contributions of The System Theory of Management
Systems Theory offers an open-view of an organization and presents the recognition of its environmental interface.
Systems Theory of Management is adaptive and dynamic
Systems Theory adopts a multi-dimensional and multilevel approach, and therefore, it considers both the micro and macro aspects of the environment.
Cybernetics is another significant contribution to Systems Theory as it is the science of communication and controls the man-machine system.
The Theory is drawn from several disciplines like Economics, Sociology, Engineering, Psychology, etc.
The Systems Theory is descriptive, not normative or prescriptive, and the Theory is also probabilistic and not deterministic and significantly emphasizes the lateral relationships over vertical relationships.
Criticism of The Systems Theory
The Systems Theory does not present any framework which does not apply to all the organizations.
The Theory is not modern but is a synthesis of all the research contributions of previous theories.
The Systems Theory is too abstract to be practical and does not specify any precise and specific relationships between the social systems and the organization.
The Theory is an amalgamation of multiple Theories like Contingency Theory, Decision Theory, and more and not a unified theory.
Modern Organization Theory – Systems Theory
Understanding the Modern Organization Theory- Systems Theory seemed to be a difficult task before you could put your hands on the above content.
However, understanding and comprehending something are two entirely different things. Students might have got the required knowledge related to the topic.
But, to test that, you need to attempt some papers so that you get to know whatever you've learnt.
Let's dive into some easy steps that can be followed to prepare for the topics of the subject.
Be Consistent: One of the most important steps that the students shall keep in mind while preparing for anything is being consistent. To start with, you have to create specific and realistic goals, make a schedule for yourself, set reminders for yourself and make sure to reward yourself whenever you complete something. The benefits of being consistent are many and the ones who try to maintain it surely scale heights. Students shall remember that it is important to keep going even when you make mistakes and also, it is very important to take breaks so that you’re able to improve your productivity levels when you start again. The game doesn’t change overnight and that is why it is important for you to give it some time to see appropriate changes.
Be Passionate: Once you follow a passionate approach, you get what you want. You just need to be crazy about your dreams, your goals, and be very focused. Students shall understand that to convert dreams into reality, you don't just need to have goals but you need to have that hunger for it. Having a passion doesn't only mean to have a wish or a desire but also, real targets. While preparing, you need to set a goal for yourself and try your level best to achieve it. You should keep cheering yourself up and make your hunger for your dreams evident.
Work Hard: The biggest truth of life is that you don't get anything without hard work. It is the master key to success. Nothing is easy, everything has its own consequences. Some people would like some subject, some would like the other. You cannot be good at everything. Make a schedule for yourself but keep in mind that the schedule made by you should be realistic and according to your habits. There would be many times that your limiting beliefs would pull you behind but to be successful, you have to convince yourself to keep moving ahead despite the hurdles that come along the way.
Be Persistent: You can skyrocket your productivity by being persistent and that can be done when you plan things. The best way to do it is by planning tasks for each day in advance. With this, you shall also focus on achieving your daily targets. Of course, there will be many obstacles on your way but with proper discipline, you can sail through them. Apart from this, it is also important to maintain a positive and motivated mindset so that you’re able to take control of your actions. After you define your goals and wants, you shall be able to outline and develop your action steps.
- Push your Limits: Another important step that you should include while preparing is pushing your limits up. Keeping a healthy competition with yourself is a great way to do so. This would help you to beat the targets and observe your study patterns. Thereafter, you can use these observations to improve your next plan of action.
FAQs on Modern Organization Theory: Systems Approach
1. What is the Systems Approach in modern organization theory?
The Systems Approach views an organization not as separate parts, but as a single, unified system where all components are interconnected and interdependent. It sees the organization as a whole, which takes inputs from its environment, processes them, and produces outputs. This approach helps in understanding how different departments work together to achieve common goals.
2. What are the main features of the Systems Approach to management?
The key features of the Systems Approach are:
- Interrelated Parts: An organization consists of multiple subsystems (like finance, marketing, HR) that are connected and influence each other.
- Boundary: Every system has a boundary that separates it from its external environment.
- Open vs. Closed Systems: It distinguishes between open systems that interact with the environment and closed systems that do not. Most businesses are open systems.
- Feedback Mechanism: The system receives feedback from the environment to adjust its future actions and outputs.
- Holistic View: It encourages managers to look at the entire organization rather than focusing on just one part in isolation.
3. What is the difference between an 'open system' and a 'closed system' in an organization?
An open system is an organization that actively interacts with its external environment. It takes in inputs like raw materials, capital, and labour, and is affected by market trends and competition. In contrast, a closed system is considered to be isolated from its environment, with no external interaction. In reality, nearly all modern organizations are open systems as they must adapt to survive.
4. How does the Systems Approach help in understanding organisational behaviour?
The Systems Approach is crucial for understanding organisational behaviour because it highlights how an action in one part of the company can affect another. For example, a change in the marketing department's strategy (a subsystem) will impact the production and finance departments. It encourages managers to see how employee behaviour is influenced not just by individual factors, but by the entire work environment and company structure.
5. Can you give a real-world example of a business using the Systems Approach?
A great example is a fast-food chain like McDonald's. It operates as a complete system. It receives inputs (raw ingredients, staff, customer orders), runs a process (cooking, assembly, service), and delivers an output (the final meal). It constantly gets feedback from customer sales and reviews, which it uses to change its menu, improve service, or launch new marketing campaigns, demonstrating its nature as an open system.
6. How does the Systems Approach compare to the Classical Approach of management?
The main difference is their focus. The Classical Approach is very mechanistic and focuses on efficiency, rules, and hierarchies within the organization (viewing it as a closed system). The Systems Approach, however, is more flexible and views the organization as an open system that must adapt to its external environment. It focuses on the interrelationships between parts and the organization's survival, rather than just internal efficiency.
7. What are some limitations or criticisms of the Systems Approach?
While useful, the Systems Approach has some limitations. It is often criticised for being too abstract and general, making it difficult to apply directly to specific managerial problems. It helps describe an organisation but doesn't always provide clear tools for solving issues. Additionally, determining the exact 'boundary' of a system in a complex global market can be very challenging.
