In simple words, a system may be defined as a set a interrelated and interdependent parts forming an organized unit or entity. These parts are known as sub-systems which interact with each other and are subject to change. They are interrelated as well as interdependent. Hence, changes in any sub-system lead to changes in others.
Any working organisation may be said to have three sub-systems as follows:
1. Technical Sub-System
It represents the formal relationships among the members of an organisation.
2. Social Sub-System
It provides social satisfaction to members through informal group relations.
3. Power Sub-System
It reflects the exercise of power or influence by individuals and groups.
The whole or total system emerges as a result of interaction between and among the various sub-systems. It is important to note that the system and its sub-systems also interact with the environment, which may influence or be influenced by the system or sub-systems. (Environment is the sun total of the factors and forces outside an organisation, such as customers, competitors, suppliers, investors, regulatory government agencies etc)
Features or Concepts of Systems Approach:
Ludwig Van Bertalanffy and Kenneth E. Boulding has been the pioneer of systems approach. Katz and Kahn, Stafford Beer, Foresster, Hertz, Norbert Wiener, McCloskey and Morse, etc have also contributed to this story.
Drawing on the work from many fields including biology, the systems approach analysis the functions of the total enterprises in terms of systems – inputs, processing, and outputs – with a view to improving their operations.
The significant features or concepts of systems approach may be outlined as follows:
1. Sub-Systems
They are the parts that make up the whole. Each system may also be a sub-system of still larger whole. For example an electronic goods company is a system, but it becomes a sub-system of the electronic goods industry, which is a larger whole.
2. Interrelatedness of Sub Systems
It is probably the distinguishing characteristics of a system, which means that a manager cannot change on sub-system without affecting the rest because the sub-systems interact with each other and therefore are dependent on each other.
For example, the solution to a problem of the Production Department (a subsystem) will have an impact on other departments (subsystems) such as Marketing and Finance – say, if it is decided to increase the production by 50% of the present output, then marketing efforts will have to be further geared to sell the enhanced production and more finances will have to be arranged for additional production.
3. Synergy
It means that the whole is greater than the sum of its part. In other words, systems approach results in synergic effect which means that 2 2 – More than 4.
4. Open System
Open system means that which interacts which its environment and closed system is that which does not interact with its environment being self-sustained. The emphasis of systems approach is an open system. It believes that most of the organizations are open systems because they depend for their inputs (i.e., money, materials, men, information etc.) on the society.
In addition, the organisation sells their outputs (i.e. goods and services) to the customers in the society. Thus, if an organisation wishes to survive, it must respond to its environment – customers and suppliers.
5. System Boundary
Each system has its boundary that separates it from the environment.
6. Environment
All systems operate, within an environment, which, for an organisation, might include customers or clients, competitors, suppliers, investors, government and regulatory government agencies, unions etc. Environment includes things that are significant to the organisation, but are largely beyond its control.
7. Flows
A system has flows of information, methods and energy including human energy. These enter the system as inputs, undergo transformation process and exit as outputs.
8. Feedback
It is the assessment of work done, identification of deviations and taking of corrective action.
9. Central Functions or Purpose
There is always a central function or purpose of a system against which the efforts of the organisation and its subsystem can be evaluated or measured.
In a nutshell, systems approach attempts to view organisation as a unified, purposeful system composed of interrelated parts. It gives manager a way of looking at the organization as a whole and as a part of the larger, external environment. The organizations are viewed as procuring and transforming inputs into outputs. The organizations are also viewed as extremely complex entities subject to changes from within and outside. In order to meet the various needs of such as organizations, a balanced and integrated approach to management is required.
At the heart of the system approach lays the following:
• Management information system (MIS)
• Communicating network for collection, analysis and flow of information and quantitative data so as to facilitate planning and control.
• Decision making system as the primary means of balancing the different parts of the organization.
• Integration of activities and departments with a view to making the best use of scare resources.
• Sub-System of management – the managers should try to adapt and cope with environmental changes.
Critical Evaluation
The systems approach may be critically evaluation as follows:
A) Contributions (Advantages)
Systems theory has made the following contributions.
1. It provides a manager a way of thinking about the job of managing and unfolds an opportunity to him for looking it the organization as a whole and for achieving overall effectiveness.
2. It provides a unified focus to organizational efforts – a direction towards which people should strive.
3. It draws attention of managers to an important factor and that is the environment in which an organization works. The interaction with the environment is dynamic.
4. It includes within it focus both micro and macro aspects of the organizations. Hence it serves a multi-level and multi-dimensional approach.
5. It implies that the modern manager should have analytical orientation should be expert in motivating to achieve goals and open mandate to receive and respect new ideas, i.e. creativity and innovation.
6. It also implies that management education must seek to develop the ability to work with and motivate others.
7. The feed back mechanism provides and opportunity to rearrange organizations part according to the change in the environment.
B) Limitations
The system theories have been criticized on the following grounds.
1. Systems theory is not a complete explanation of the whole organizational system. It does not explain how the sub-system of the specific organization is uniquely related in a given environment.
2. The conceptional framework for understanding organization provided by system theory is too abstract.
3. It does not really offer any new thing. Managers do understand interrelationship between different parts and the influence of environment on organization and it sub-systems.