Modern Organization Theory of Management-System Theory

Modern Organization Theory of Management

Modern Organization Theory of Management

Modern organization theory owes its origin to the general systems theory (GST), developed by Ludwig Von Bertalanffy. The other contributors to the systems approach are F.E. Kast, J.E. Rosenzweig, Daniel Katz and R.L. Trist. Modern organization theory provides an integrated view of all the Organization Theories and approaches, viz., Classical theories based on Static and formal structure, Neo-Classical Theories based on dynamic and informal structure with emphasis on human relations and social and psychological factors. Based on General Systems Theory, Modern Organization Theory has attempted to answer issues which remained unanswered by classical or neoclassical theories. Modern theory is analytical and based on empirical research data. It is integrative by nature. Modern organization theory is principally based on systems approach.

Systems Approach : Concept

We can examine any functioning unitary whole, such a human body, a machine or an organization from two angles i.e. moralistic angle or systemic angle. When we look at the unitary whole as a composite unit, it presents a moralistic approach. This approach serves as starting point for an end-means analysis, facilitates division of work, setting goals and judging performance in view of such goals. But this approach does not analyze the relationship between different parts and systems of the composite units, impact of one element of the other, changes in one element causing changes in other, effect of environment on the unitary whole and so on. The systems approach not only focuses its attention on the overall picture of the unit but also on the internal parts and systems, their interaction and interrelationships. It provides deeper insight into entire organizational phenomenon, explaining relationships among its elements and various processes through which they are inter-linked. According to Kast and Rosenzweig, systems approach provides a basis for integration by giving us a way to view the total organization in interaction with its environment and for conceptualization of relationships among internal components or sub-systems.

Definition of System Approach:

Kats and Rosenzweig define a system “as an organized, unitary whole composed of two or more interdependent parts, components or subsystems and delineated by identifiable boundaries from its environmental suprasystem.” Thus a system is a complex and composite unit having various parts and sub-systems, mutually dependent, jointly functioning and interacting with each other and with that of the environment around them.

Characteristics of a System

The following are the main characteristics of a system:

1. Several parts and subsystems:

   A system is a unitary whole composed of several parts an subsystems. The human body as a system, has several parts, such a head, eyes, nose, hands, legs, heart, lung, kidney, etc. and several subsystems, such as respiratory system, circulatory, system, excretory system, reproductory system, etc. Similarly, a machine, a university and organization, are also unitary wholes (systems) composed of various parts and subsystems.

2. Interdependence:

   All the parts and subsystems are not merely a conglomeration but they are closely linked, interdependent, and jointly function in relation to the other. In a human body, this inter-linking is natural but in other cases this mutual relationship has to be consciously set in the context of the whole system.

3. Multiplicity of Objectives:

   In a system or unitary whole, every part of subsystem has got its own objectives, structure processes or norms of conduct, but all of their goals, process and norms should ultimately assists in attaining the goals of the system as a whole.

4. Interaction:

   Different elements of a unitary system interact within themselves and with the environment outside. The change in one part or subsystem necessitates a change in the other parts or subsystems to bring a new equilibrium in the whole system. The environment influences these parts and subsystems and is also influenced by them. The interaction is continuous and which makes the whole (system) a dynamic entity. Interaction and environmental impact result in emerging new systems and subsystems. Systems approach, therefore, believes in dynamics, instead of, static equilibrium.

5. Closes and Open System:

   A closed system is one which is neither influenced by nor does influence the environment. An open system has an environment with which it interacts. It is influenced by the outside systems and, in turn, influences the outside systems. Almost all the living systems are open systems. An organisation is an open systems since it has to function in an economic, social cultural and psychological environment. Every system has a limit or a boundary within which it should operate. Without understanding the boundaries of a system, it cannot be properly understood, analysed and adapted.

6. Input-Output System:

   Every system and its subsystems need some inputs (resources of energy) to deliver outputs. For instance, human body requires oxygen, water and food (input) for delivering output regeneration and maintenance of cells, purification of blood and protecting it against diseases and deficiencies. Similarly, an organisation needs some inputs (financial, human and physical) in order to deliver outputs (products, services and satisfactions).

Appraisal of Modern Theory: Merits

1. Modern organization theory based on systems approach presents much realistic view of organisational behaviour. Having an empirical and analytical base, the modern organisation theory takes a “holistic view” of the organisations and emphasis on interrelationships and interactions among several parts and subsystems within and with those of their environment. It considers organization as an open, organic and probabilistic system as opposed to traditional, closed, mechanistic and deterministic systems and, as such, it analyses the influence and relationship of the organisations with their environment and stresses on adaptability, flexibility and equability. Thought input-output relationship and feedback mechanism, the theory emphasises on the importance of communication, control and coordination in a dynamic system for continuous adaptability and equilibrium.

Criticism:

1. The modern organization theory has been criticized on the ground that the conceptual framework for understanding organizations provided by it is too abstract. It does not really offer anything new.
2. Managers do understand the relationship among different parts and subsystems of an organization and the environmental influence on them. But the theory fails to indicate the nature of precise relationship between different parts in a given situation and the best way to deal with the problem in that situation.
3. Although the systems theory has fascinating appeal, it is not fully developed. It is fragmented as an outcome of scattered and isolated attempts and lacks the integration of techniques and concepts.

As a matter of fact, evolution of theories is a gradual process. Every theory attempts to retain the best of the existing theory, develops new insights and refines the body of knowledge accordingly.

Important links

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• Relationship between Strategic Formulation and Implementation
• Strategy Evaluation and Control- Meaning, Purpose etc.

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