A system view of organizations & Implications to the practical management practice

By | April 19, 2014

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Content page

1.     Introduction of the thinking of organization…………………………………………………. 2

2.     The traditional view of organizational hierarchy……………………………………………. 2

2.1      Vertical hierarchy……………………………………………………………………………… 3

2.2      Span of control………………………………………………………………………………… 3

2.3      Scope of responsibility……………………………………………………………………… 4

3.     A system view of organizations…………………………………………………………………… 4

3.1      The concept of systems…………………………………………………………………….. 4

3.2      Horizontal structure………………………………………………………………………….. 5

3.3      A SIPOC diagram……………………………………………………………………………. 6

4.     Conclusion……………………………………………………………………………………………….. 7

5.     Implications to the practical management practice…………………………………………. 8

5.1      Customer satisfaction is the final output of the process…………………………. 8

5.2      Business is the total of the systems and processes………………………………… 8

Reference……………………………………………………………………………………………………….. 9

Organizations are systems

 

1.        Introduction of the thinking of organization

 

In the work environment in which employees deliver their daily work nowadays is believed to be undergoing rapid change. And the changing environment also requires the managers to have the corresponding new thinking of business management in term of new theories, views and models such as the six sigma, reengineering and performance measurement (Paton, Clark, Jones, Lewis & Quintas 2001).

 

Here we will focus on the field of organization structure which could be referred as the system of task, reporting and authority relationships in the organizations (Griffin & Moorhead 2010, p.407). The target of setting the organization is to maintain the order and stability of the organization for the convenience of getting the work done. Organization structure consists of three parts: a) Design the formal reporting relationship; b) Identify the grouping of employees into departments; c) Design of the systems to communicate and coordinate (Daft 2008, p.649). Below we will discuss two different view of organization: the organizational hierarchy as a traditional organization structure view and a new system view of organizations.

 

2.        The traditional view of organizational hierarchy

 

The first view of organization structure which is the traditional view of how the organization should be formed is the organizational hierarchy. A hierarchy thinking considers that an organization should be managed using the strategy of management control and it is usually associated with bureaucratic approaches to achieve goal of the management control (Grant 2000, p.548). There are three major goals of using the traditional organization hierarchy to structure a firm. At first, with the adoption of the organizational hierarchy, a company could control the allocation of the company resources; second, a hierarchy could ensure the monitoring of how the company resources are utilized; last but not least, a hierarchy structure could help control the flow of the information because in a hierarchy the important information are communicated from top down to the executive employees so that the information flow could be well controlled in the upstream which is the top management level.

 

2.1    Vertical hierarchy

 

Figure 1 A typical hierarchy structure

Source: (Gerst 2009)

 

As illustrated in the figure above, a typical organization hierarchy is like an upside down tree; there will be fewer and fewer people as getting closer to the top of the hierarchy. The hierarchy is usually a vertical structure that the allocation of resources and assignment of tasks will be also a vertical top down process.

 

2.2    Span of control

 

In term of the span of control which could be understood as the number of people who will be managed one responsible person (Dive 2004, p.294). As we can see from the figure of the typical hierarchy structure above, the span of control will be determined by the number of those who are under an individual in the hierarchy. For example, under the position of CEO there are three Vice Presidents while under each Vice President will be the managers reporting to him or her.

 

2.3    Scope of responsibility

 

Another important issue about the any organization structure is the scope of responsibility which deals with the delegation of the responsibility, and the scope of responsibility must be clearly set out (Taylor & Daniel 2005, p.45) to avoid management disorder. The determination of the scope of responsibility relies on the structure of the organization. In a typical hierarchy structure, immediate responsibility will happen between the boss and those who are under him or her directly, and indirect responsibility will also passed from down to the top level making the top management feel the responsibility even the lowest level employee makes a serious mistake. Problems of the responsibility in a hierarchy structure are many, one of the major problems is that managers will tend to be responsible to those who are under their control but would not care about the performance from other department who are not within the scope of responsibility.

 

3.        A system view of organizations

 

3.1    The concept of systems

 

System like organisms consists of a number of subsystems which are differentiated but interrelated (Morgan 1998, p.43). As seen from the figure below, if we apprehend an organization like a system there will be subsystems that make up the whole system. Individual employees are divided into these subsystems in term of different departments and the functions of these subsystems are different in nature such as strategic subsystem which will handle the job of corporate strategies making while a technological subsystem will handle the jobs like Research and Development (R&D). But one thing that needs to be noticed is that these subsystems are similar to Chinese boxes that they are intercross, meaning to say that a single department’s job is not isolated and in order to get the job done, one department may need the coordination and assistance from other subsystems, i.e. other departments. And in the angle of the whole organization, the system view suggests that inputs such as human resources, financial capital and materials will be absorbed into the organization system and converted in the system and finally will be turned into the organizational outputs in the form of final products and services.

 

 

Figure 2 Organization as a system

Source: Kast & Rosenzweig 1973, p.36

 

3.2    Horizontal structure

 

As seen from the figure above showing the functioning process of the organization system, we can see that the system thinking of organization focuses on the flow of work. And like we have just discussed, the work flow or process starts with inputs such as human resources, financial capital and materials will be absorbed into the organization system and converted in the system and finally will be turned into the organizational outputs in the form of final products and services. From this process view, compared to the traditional organization hierarchy view it focuses more on the flow of the work and so the improvement of the organizational performance and effectiveness could be achieved by four major methods: a) Reduce the circle in the process will help increase the organizational efficiency; b) Increase the input; c) reduce the work involved in the process when maintain the normal functions of the system would reduce the cost; and d) enhance the customer satisfaction in term of deliver of the quality output in a proper manner.

 

What’s more a horizontal structure also encourages horizontal communication and coordination. There are more and more companies today emphasize the horizontal communication, with employees sharing the information across departments and in the same levels (Daft & Marcic 2008, p.672). As mentioned above that the system view holds the point that organization like organisms contains a number of subsystems which are similar to Chinese boxes and they are intercross and inter-related, meaning to say that a single department’s job is not isolated and in order to get the job done different departments have to work closely. And during the cooperation between different functioning departments, horizontal communication becomes significantly important.

 

3.3    A SIPOC diagram

 

 

Figure 3 A system view mode: SIPOC diagram, Source: (Gerst 2009)

A system view model of the organization structure is shown in the figure above. This model provides theoretical support to what we have just discussed about the knowledge about the process view of the organization. In this model, inputs are linked to the external suppliers and some of the metrics of process include throughput, cycle time, quality, cost and work in progress but the inputs such as labor forces have not mentioned in this model but they are actually in the process. And the final outputs are directly linked to the customers of different kind suggesting that different customers may need different customized products and services.

 

4.        Conclusion

 

Based on the discussion above, we can see that the compared to the hierarchical view of the organization structure, a system view or process view holds that organization structure is like organism that consists of different functioning system that are inter related but in charge of different jobs. Different from the hierarchical view, the process view focuses on every system and process that makes up the whole system, and coordination and communication become critical to the functioning system rather than the control of the resources and allocation of the tasks in order to push forward the job progress. But one thing need to be noticed is that like the fact that there is no one best way of organizing a structure in all circumstances, the development of the management thinking about the organization structure from the hierarchical view to system view does not necessarily indicate that the later is better than the previously, it depends on the actual scenarios and a company needs to take into account of the actual management practice and various business environmental factors to decide which view will be better to achieve its business goals. Below we will check what implications the system view of organization could bring to actual our business practices.

 

 

5.        Implications to the practical management practice

5.1    Customer satisfaction is the final output of the process

 

As we can see from the model that has been discussed, the final outputs of the process or system are the end products and services that are to be consumed by the customers and in other words, customers have the final decision to decide whether to purchase the goods and service or not. So that the customer satisfaction is the final output of the process which need to be noticed, what’s more different groups of customers may have different needs for the particular products. To deal with this issue, companies need to start the building of the whole process from the needs of the customers, and introduce the correct inputs and process the input correctly to produce the desired outputs that help generate customer satisfaction.

 

5.2    Business is the total of the systems and processes

 

The system or process view of organization structure indicates that the sum of the systems and processes make up the business a company. But it is not the simple add up of all the different departments, the functioning areas should work closely as an integral mechanism through cooperation and coordination. But as we know since employees from different departments may have problems work together without any difficulties when they are reporting to different managers, so that it will be of great importance to keep the horizontal communication especially in the manager level to help keep the coordination from the top down. What’s more the view that the business is the total of the systems and processes also indicates that companies need to focus on every part of the system rather than only the senior management level in the hierarchy.

 

5.3

Reference

 

Daft, R. L. 2008, Organization Theory and Design, Mason: South- Western, Cengage Learning, p.649

 

Daft, R. L., & Marcic, D. 2008, Understanding Management, Mason: south – Cengage Learning, p.672

 

Dive, B. 2004, The healthy organization: a revolutionary approach to people and management. 2nd edn, Sterling: Kogan Page Limited, p.294

 

Griffin, R. W. & Moorhead, G. 2010, Organizational Behavior: Managing People and Organizations, Mason: South- Western, Cengage Learning, p.407

 

Gerst, R. 2009, A3* White Paper: The New Management Thinking. Viewed on 26th Apr Link: http://www.converge-group.net/wp-content/uploads/2009/09/a3wpnewmgmt.pdf

 

Grant, R. M. 2000, Contemporary strategy analysis, 5th edn, Victoria: Wiley- Blackwell Publishing, p.548

 

Kast, F. E. & Rosenzweig, J. E. 1973, Contingency view of organization and management, New York: Science Research Associations, Inc, p.36

 

Morgan, G. 1998, Images of organization. Berkeley: Sage Publications, p.43

 

Paton, R., Clark, G., Jones, G., Lewis, J. & Quintas, P. 2001. The New Management Reader, London: Thomson Learning

 

Taylor, J. & Daniel, B. 2005, Child neglect: practice issues for health and social care. London: Jessica Kingsley Publishers, p.45