A system is a collection of parts (or sub-systems), which is integrated to accomplish an overall goal of an organization. Systems have inputs, processes, outputs and outcomes, with ongoing feedback among these various parts. If one part of the system is removed, the nature of the system is changed. Systems range from very simple to very complex. Social systems are comprised of numerous sub-systems, as well.
These sub-systems are arranged in hierarchies and integrated to accomplish the overall goal of the overall system. Each sub-system has its own boundaries of sorts and includes various inputs, processes, outputs and outcomes geared to accomplish an overall goal for the sub-system.
Any organization can be viewed as a system since an organization is a unitary whole. It consists of arrangement of activities to achieve its objectives. A system is an arrangement of activities designed to get something done. The systems approach studies the entire arrangement rather than a single sub-set of organizational activities. It considers an organization in its totality.
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Systems theory has brought a new perspective for managers to interpret patterns and events in their organizations. In the past, managers typically used to focus on one part at a time. The problem with that process was that an organization could, for example, have wonderful departments that operate well by themselves, but they might not integrate well together. Consequently, the organization suffers as a whole.
Now, more managers are recognizing the various parts of the organization and, in particular, the interrelations of the parts, e.g., the coordination of central offices with other departments, engineering with manufacturing, supervisors with workers, etc. Managers focus more attention on matters of ongoing organization and feedback.
They diagnose problems, not by examining what appear to be separate pieces of the organization but by recognizing larger patterns of interactions. They maintain perspective by focusing on the outcomes they want from their organizations. Now managers focus on structures that provoke behaviours to determine events, rather than reacting to events as was always done in the past.
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Thus every organization effectively functions through an integrated interlocking network of sub-systems. Any organization, as a system, possesses the following attributes:
1. The system is goal oriented
2. The whole is more than the sum of all parts in a system
3. A system is engaged in processing or transformation of inputs into output
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4. Various components of a system are interrelated and interdependent, and they interact with each other
5. A system acts upon its environment and is also acted upon by the environment
Therefore, an organization is considered as a system, as it draws input from the environment and also with other resource inputs like men, materials, machines and knowledge. An organization then processes these inputs and gets the output, i.e., the end product or services. Finally, with the feedback in its loop, it again tries to adjust with the environmental requirements. Systems approach in managing organization is followed primarily for following reasons:
1. It lays emphasis on the dynamic character of business, considering it as a living organism
2. It focuses on the interrelationship between business and the environment
3. It stresses on the changing environment and accordingly adjusts through managing the change
4. It provides information inputs for decision making and managerial control
5. It guides formulation of business objectives, which are sustainable, keeping pace with the environment
6. It subsumes organization as a whole, considering each unit or department of an organization as a part or sub-system. These sub-systems are both interrelated and interdependent
7. Finally, it frames an integrated structure, incorporating each sub-system as the part of the total system
Concept of systems in organization, primarily, emerged for the interconnectedness of phenomena, which could be external or internal to the organizations. With systems approach, an organization can manage the process of transformation from inputs to outputs. Although systems approach to organization has many manifestations, we are primarily concerned with the organizational structure part, which is better understood once we view an organization holistically.