Understanding Organizational Systems


Structure and Design

In simple terms organization is made of group of people with some specific goals and objectives. It is defined as relations among components of a system. Organization structure denotes the components and relations that bind people working with the organization. Three pillars of organization are the people, the organization itself (considering it as a separate entity) and the technology. People issues encompass education, training and attitudes. Organization issues cover strategy, policy, culture and bureaucracy. Technology issues are hardware, software, telecommunications and information systems. Three different levels of organization structure are strategic, tactical and operational. Strategic level represents decision making level, i.e., the corporate or the top level of an organization. Tactical or business level is the middle management level, where strategic decisions are transformed into tactics to achieve the strategic intents. Operational level represents the actual implementation level, where first level employees and workers, execute the tactics, adopting the actions plans.


Organization structure helps us to determine the authority relationships among the members of organization, and hence it influences the behaviour of individuals, groups and divisions within the organizations. Among others, structure of an organization affects the division of tasks, communication systems, decision making patterns and finally the way how people relate to each other. Global competition now requires many organizations to re-define their structure and even to relocate, taking advantage of state of art technology and communication support.

which is set up to achieve some defined goals. to achieve intended goals. which facilitates to relate tasks and facilities of people working in an enterprise.What is an organization? Organization is essentially a formal structure of people. and describe the working relationships . It shows a structure of relationship in an enterprise It is a process. According to Arthur Young to create an organization.     Organization is a group of people who are organized to achieve a common purpose. establish authority and responsibility. a unit or a establishment. It is an entity. we group the activities. which utilises resources to achieve some common purpose. Commonly we use following terms to define any organization.

a system of relationships. More specifically it is defined as a formal social group. Organizing and Organization Structure The term organization is used to refer a social group. which govern the activities of the people working in the organization to achieve some intended goals. i. Organizing is a management process of identifying. Also the term organization is referred as a process of determining activities that are required to achieve intended goals.. Organization structure is the outcome of organizing process. classifying. . which is deliberately created and maintained to achieve some intended goals.Organization. grouping and assigning various activities with adequately defined authority relationships to achieve intended goals.e. creating various roles and ensuring effective operation of the total system. It is a framework of decision-making authority.

with ongoing feedback among these various parts. as organization is a unitary whole.Systems view of Organization Organizations are viewed from systems perspectives. processes. as systems is a collection of parts (or sub-systems). Organization is viewed as a system. outputs and outcomes. Systems theory also provides new perspective for managers to interpret patterns and events in their organizations. Systems have inputs. the nature of the system is changed. It consists of arrangement of activities to achieve its objectives. which is integrated to accomplish the goals and objectives of the organization. . If one part of the system is removed.

. The whole is more than the sum of all parts in a system.Attributes of a System The system is goal oriented. A system is engaged in processing or transformation of inputs into output. They interact with each other. Various components of a system are interrelated and interdependent. A system acts upon its environment and is also acted upon by the environment.

e. It guides formulation of business objectives. .. Finally with feedback in its loop. keeping pace with the environment. which is inter-related and interdependent. It focuses on the inter-relationship between business and the environment. machines and knowledge. Finally it frames an integrated structure. incorporating each sub-system as part of the total system. Why Systems Approach for Organization? It emphasizes on the dynamic character of business. considering each unit or department of an organization as part of the sub-system. It subsumes organization as a whole. considering it as a living organism. It stresses on the changing environment and accordingly adjusts through managing the change. which are sustainable.Why Organization is a System? Organization is a system as it draws input from the environment also and with other resource inputs like. materials. the end product or services. It provides information inputs for decision making and managerial control. it again tries to adjust with the environmental requirements. i. men. processes those and then get the output.

change or train the operating core. The middle line managers aligns strategic apex with the operating core. plan. which is outside of the operating core. designs. As Mintzberg believed organization structure is a configuration systems and relationships. The strategic apex part of the organizations is involved with controlling. The support staff provides support to the organization. as illustrated in the figure below: people in the operating core part of the organization are involved in the production of goods and services.Components of Organizational Structure According to Mintzberg (1981). Finally ideology is the traditions and beliefs that make one organization distinctly different . he suggested six components. People at the techno-structure core. organizational structure is the sum total of the ways in which it divides it’s labour into distinct tasks and then achieves coordination among them.

Tata Motors. and rigorously practice insularity (preventing employees of one department to enter into another). and not collaboration among employees. prevent internal and external cooperation. etc.Types of Organizational Structure Organization structure can be classified into five different types:     Machine bureaucracy (standardized structure). Professional bureaucracy Adhocracy or innovative forms Simple or entrepreneurial forms Divisional forms Each structural form indicates different pattern of behaviour of the organization. Hindustan Motors. narrow-minded. Organizational structure that conforms to machine bureaucracy emphasizes on:      Standardization of work Centralized decision-making Limitations of behaviour and procedures for members Polarization of status (maintaining hierarchies) Enforce internal and external control on stakeholders Characteristically such organizations are secretive. . Tata Steel. are examples of machine bureaucracies. Such organizations promote competition. GM and Ford. Very large organizations like.

. They decentralize their decision making. hence such organizations can also practice knowledge management. may not always imply decentralization of decision-making.Organizations that subscribe to the professional bureaucracy discard formalizations. however. negotiation and interaction among people and divisions. Such organizations believe in employees’ empowerment and total employee involvement (TEI) and even they build employees’ capability to cope with the external eventualities. as a single person (usually the entrepreneur himself/herself) directs the activities of the firm. Organizations with innovative or adhocracy structure emphasize on developing their distinctive cultural identity. The entrepreneurial form or organization structure is simple. Professional people manage such organizations and hence employees enjoy functional control and less control. Free and open culture promote learning environment. The fifth and final type organizational structure is the divisional form. Such form or organizational structure focuses on autonomous divisions. and truly transform people as good performers. discussion. competency development. They are more prone to alliance building behaviour. process. and promote open communication. which. Often this form of organization structure sparks intra-unit fighting.

Roles are not clearly defined. Specialization based formal training. hence they become the power-centre. . Less formalization of behaviour. Low standardization of procedures. Selective decentralization Work organization rests on specialized team. Horizontal job specialization High cost of communication Culture based on democratic and non-bureaucratic work Cross-departmental task forces.Syndromes of Adhocracy Structure More organic structure. Encouragement of mutual adjustment.

achieves its goals optimizing its resources. etc. attitudes. customer satisfaction.Organizational Effectiveness Effectiveness is the extent of an activity that helps in achieving the long-term goals. as a whole. changes in the profitability.. skills and behaviour are measured using qualitative tools. small group activities. . Behavioural parameters like. etc. we can use both the qualitative and quantitative tools. positive attitudes. are measured using quantitative tools. values. To measure the effectiveness. Value and volume of output changes. Organizational effectiveness is the extent to which the organization. technical competencies. Organizational effectiveness refers to the corporate management systems that produce development results of an organization. Since we measure effectiveness for specific activity. an effective organizational structure helps in achieving organizational effectiveness. which together contributes to the achievement of organizational goals and objectives. we can define activity specific effectiveness is the outcome that support the broader goals of an organization. Among others. It depends on the degree of interpersonal skills.

Such organizations. adopt incremental strategies (short-term) to fix some events. characteristically. it becomes limited. as and when they arise. Behaviour of systems depends on the structure of the organization. we can list the systems principles as under: Organizational systems follow pattern of events in a cycle. Each pattern of event indicates some specific phases. Based on the above discussions. and behaviour determines various events in organizations. and at each phase. A circular relationship exists between the overall system and its parts. behaviour of the organization changes Systems interpret patterns and events in their organizations Systems seek balance with the organizational environments When systems do not interact with their environment. Breaking organizational systems only by responding to the events become more an effort like addressing to organizational problems. Organizational structure determines the various behaviours.Systems Theory Principles Systems theory identifies certain commonalities in systems. Such commonalities are developed based on certain well accepted principles of systems for organizations. .

output. and equifinal Cycle of Events is a process in open systems organization. Negative Entrophy represents ability of the organization to autonomously repair itself and then survive and grow by importing resources from its environment and transforming them to outputs. throughput. cycles of events. Equifinality principle of the open systems organization achieves their objectives through several different courses of action. Contd…2/- . integration and co-ordination. steady or dynamic homeostasis. by which it receives inputs from the environment and then transforms them and generate output. Organizations through steady or dynamic homeostasis maintain equilibrium over a period of time. differentiation.Open Systems approach in organization In today’s changing world. negative entrophy. energy. Open systems approach attributes are. organizations develop structures and develop specialized functions. information input. Through differentiation. open system approach to organization is considered more relevant.

organization builds the systems model. Finally at the operation stage supports are provided to continue with the designed systems documenting the activities involved. keeping in view various eventualities. identify different sub-systems and establish their inter-relationships. which could cope with uncertainties. organization defines the systems. final design is built. Thus both Systems Analysis and Systems Engineering provide a general way of thinking about practical situations requiring the creation of a system that achieves some pre-defined purpose. systems design. At systems analysis stage. implementation and operation.Systems engineering approach encompasses technological. training etc. It follows four different stages like. systems analysis. At the implementation stage. . optimizing the resources. organizational and societal systems. At systems design stage. user manuals.

Beer observed organizational systems can sustain independent existence despite the operations of Law of Requisite Variety. the word variety denotes complexity. and develop necessary intervention strategies. In cybernetics. creates the conditions. designing management structure. which can interact with the environment. Organizational Cybernetics and Organizational Systems Viable System Model (VSM) postulated by S. A system is said to be viable when it is able to adapt effectively to environmental changes. mission and structure it is used. and sustain its independent existence. . The law describes how complexity could operate to overpower a system of management. even though such changes are unforeseen. According to Beer cybernetics is ‘the science of effective organization’. Management instead of dealing with the environmental complexity should create the appropriate operating process. organisations can diagnose the major dysfunctions. Based on his study of organic systems. VSM also helps in systematic thinking in organizations. It is used in organization to diagnose different elements.Viable Systems Model. Even in designing organizational vision. in designing information systems. Beer (1979) VSM is an important instrument in the operationalization of the organizational cybernetics approach. making use of which. etc. Therefore. VSM thus consists of operation (O) with embedded management (M) and environment (E). which is infinite. Thus VSM as an organizational framework of various functions and relationships.

according to Beer exhibit following properties. Self awareness (organization must aware of themselves on what they comprise). Ability to self repair (organisation should be capable enough to selfrepair to sustain existence). Self organising (organizational structure should be environment and context specific). Maintenance of identity (every organization must have a purpose and accordingly should organise its means to achieve the same). Self balancing (homeostasis). Open systems (adaptive to extract information from their environment) .Operations of the Law of Requisite Variety.

The model comprises two operating systems that primarily interact with the external environment and the five attendant systems. demonstrating specific interrelationships and producing the properties of variability. 5 Identity Total Environment Meta System The Future? 4 Intelligence 3 Control Audit 3* Env A Coordination 2 1 Op A Operating System Env B 1 Op B Viable System .

i. i. which govern the overall system outcomes. As per the model.e. Change in System 3.e. external and internal perspectives. System 4 examines the external environment and gains the intelligence about the totality and the future.e. System 5 balances the present and the future... . System 5 passes down to System 3. moderating its relationship between systems 3 and system 4. i. in VSM. System 5 represents the identity. the policies and authority.e. any of the six systems operate with a cybernetic intervention at any point in time.. managed by System 2..e. the total system purpose and the measures of success.Viable system…contd…. i. System 3 and each of System 1 (A and B) through interactions establish agreements. i. and in the process ensure that the organisation become a self-controlling system. Therefore. influence System 1 (operational systems.. B). A and management function.

. When the organization is efficient. it not only considers relationships and reciprocal influences between the organization and its environment.Orchestra Organization The term orchestra organization is used in open system perspective. Even the coordinating function is considered as throughput. an orchestra organization is a complex set of interdependent subsystems. Depending on its structure and the use of physical space. determine the success of an organization. The job of coordinating in orchestra organization could be both formal and informal. it even considers extending its sphere beyond the formal boundary. Boundary spanning subsystems play the buffering role to account for external organizational uncertainty. which are distinct and interdependent. depends how they organize their human resources. as it helps in the goal of achieving the output. however. It. and produces output. An open system organization takes input from the environment. Efficient interactions with the environment and various subsystems. in a typical orchestra organization are specialized functions. through an efficient boundary spanning sub systems. Processes or throughput. an orchestra organization may emphasize more on informal coordination. processes those. in an open system. as like an open system organization.

simulating the weather pattern given a visual presentation to explain the theory of chaos as under: The picture resemble to a butterfly. the future may unfold quite differently. . The theory of chaos deals with the structure of turbulence. but when the system is unpredictable at a certain stage.Chaos Theory Chaos theory studies the complexity of world to identify principles to understand the organizations.. hence it is also known as the `Butterfly effect’. a meteorologist. Edward Lorenz of MIT (quoted in Hilborn. study of unpredictable complex systems. The application of chaos theory to management depicts organizations as complex and unpredictable because of the relations among constituents of a system. "The Butterfly Effect" refers to the discovery that in a chaotic system. 2004). depending upon what little difference occurred. i. it is theoretically possible that slight change would make no difference whatsoever.e.

economical. a complex orbit. cause the behaviour. Contd. Set of values and strange attractors:: In chaos theory same set of values migrates over a time in a given system. attractors. a strategy or decision will never be made twice even with the same context. It means attractors (set of values) in chaos theory act as the influence of gravity.e.2/- . In organization. which means that a system is never exactly the same.. a team with essentially identical personnel and similar characteristics will never perform exactly the same. or an infinite number of points. Attractors can be a single fixed point. In organization. i. the set of values.Characteristics of a chaotic system are as follows: It is sensitive to initial conditions: A complex system reacts to different variables at the outset in unpredictable ways. there is never the same context twice. Even starting with the same. which alter over time. Hence in organizations. a collection of points. or other forces that drive the system at a given point of time and how they interact. if the system is complex.. exact or slightly different variables in a model will not result in the same outcomes. depending upon the social. Same context may not hold good again and again: In a complex system.

Theory of bifurcation: Bifurcation is the sudden appearance of qualitatively different solutions to the equations for a nonlinear system as a parameter is varied. if magnified in scale. like a fractal in the managerial hierarchy. Theorists in management and social organization now believe that organizations are also non-linear dynamic systems. as complexity increases.Chaos is fractal: Literally fractal means a curve or surface that is independent of scale. a manager is prompted to take advantage of its complexity. Any segment. In an organization. two different patterns (groups) can emerge to address an issue differently. Rather than control in organization. having the same characteristics as natural phenomena. and in this way the analogy is made between chaos in natural systems and the social organization. . In the management analogy. Organizations are complex and adaptive systems that have behaviours similar to those found in nature--different stages of stability and chaos. appears identical to the whole curve. The organization is often seen as complex adaptive system comprised of the formal and shadow systems. This is often recommended as a source of creativity. it is assumed that different levels of organization resemble others. A form of social structures can be examined in relation to characteristics of the whole system at the macro and micro levels.

values and needs. skills. Integrating technical and social sub-systems. tools and techniques. Technical sub-systems.Socio-Technical Systems Thinking Pioneered by the Tavistock Institute of London. which suggest developing management information systems. consist of technology and tasks. organizations develop the desired structure. integrating social and technical subsystems. according to this model. . therefore. as per the model the technical sub-system consists of the devices. which transform inputs to outputs to enhance the economic performance of the organization. The social system consists of employees. attitudes. A schematic representation of the model based on Bostrom. and social sub-systems consist of structure and people. their knowledge. Heinen and Stephen (1977).

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