The Organization Systems Theory - Research Paper Example

The Organizational System Theory and Section # of THE ORGANIZATIONAL SYSTEM THEORY The organizational system is determined through the functions an organization performs and the proper functions have a great effect on the profitability of the organization. This paper addresses the following questions: 1. Describe a system breakdown that you experienced. Briefly explain the circumstances and outcomes to the internal and external environments, on both an individual and group level. 2. Research and analyze the systems theory. What are the strengths of this perspective of organizations? What are the gaps? Explain your rationale. 3. Compare and contrast the challenges with integrating two systems as the result of an acquisition and as the results of a merger. What are the differences in those two systems changes? What are the similarities? In what ways do the systems change in acquisitions and in mergers? ORGANIZATIONAL SYSTEM BREAKDOWN The organizational system breakdown that I experienced was more of a vertical kind of a structure, having deep hierarchy. It can be summarized like the diagram below: The head of the organization is the chief executive who ultimately has a control over the whole organization. The Managing Director works under the chief executive and coordinates and supervises the work of the different functional managers. The functional manager directs and controls the work of the staff. The staff consists of further hierarchies of senior officer, junior officer and other lower lever employees. This organization with such a breakdown structure can be called as ‘functional organization’ because there are various functions which are forming the basis of the hierarchy in the structure. Circumstances and Outcomes to the Internal and External Environments As previously mentioned, organizational structure has a significant effect on the working and profitability of the organization. The structure of an organization also has a tremendous effect on both an individual and group level. Based on the hierarchy in the breakdown structure, the culture and environment of the organization is effected, consequently causing changes at the individual and group level. Considering the internal environment of the organization, at group level, the different functions work individually and there is coordination and cooperation among the individuals of the particular group or function. The group may or may not be integrated. When there is no integration among the groups, the organization’s internal environment may not foster. However at the individual level, as there is coordination within the group, the individuals perform better. Changes in the internal environment of the organization may result in job dissatisfaction of the individuals or job security issues may arise due to negative changes in the internal working environment. The external environment forces the organization for the need to integrate its functions. This is because to remain competitive in the industry, an organization needs to focus on what the customer wants and all departments of the organization need to work coherently so that there are no gaps in the ultimate product due to lack of communication among the departments. The external environment may cause the individuals of the organization to leave the organization if a competitor hires the individual on better terms and conditions. Therefore, there is a need to integrate all the functions of the organization in order to enhance and foster the culture and environment of the organization to provide job security to the employees of the organization and increase motivation and job satisfaction which will consequently result in an increase in the productivity and profitability of the organization. SYSTEMS THEORY Systems Theory basically studies the complex systems that exist in the organization or any environment. Any system interacts continuously with the internal and external environment. Organizations possess this system theory because every organization has HR and other resources that interact with the internal and external environment. Systems theory has a great impact on the organizations because the system of the organization strongly impacts the planning and implementation of resources of the organization. There are certain assumptions of the organizational systems theory, which are as under: 1. The systems theory assumes that there is a continuous input of various resources from the organization so that the organization does not goes in a loss as a consequence. 2. It also assumes that the different changes resulting from the internal and external environment of the organization are welcomed and not resisted by the organization. And also these changes are successfully implemented. 3. Information flow in the organization is efficient through which the organization can continue with its business and be profitable. 4. The inputs from the organization are successfully transformed into productive outputs which are considered an asset to the organization. The scientific method of systems theory says that a system can be split into components and each component can then be monitored as a separate entity and also the various components of a system represent the whole system in totality. There is always interaction present in the system and this interaction should be positive in order to increase productivity of the organization. Communication, culture and Decision making are integral components of the systems theory and this need to be monitored and controlled very competently. The productivity of the people resource in the organization is dependent on the environment, culture and working conditions of the organizations. The systems theory also emphasizes that organizations should have an open system which is open to changes and improvement so that the organization can remain healthy and grow with the rapidly changing environments. Thus, the systems theory is a powerful approach in solving complex problems and alternatives. There are certain strengths and weaknesses of the systems theory of which the managers should have knowledge of. These are as under: Strengths of This Perspective of Organizations Systems theory is very important and the major strength of systems theory is that it follows scientific approach. Through systems theory, organizations can efficiently and effectively generate and evaluate alternatives and select the best alternative for the organization. Another major strength is that organizations using systems theory are ale to solve complex problems very efficiently. Also if there is relative experience and intuition present in the managers who are using the systems theory, the approach pays out well. Gaps A major gap that exists in models following systems theory is that they may be very unclear and ambiguous, leaving the organizations in a fix. Also if there is no prior experience or relative knowledge of the domain of organizational systems theory, it is difficult to decipher efficient solutions to complex problems. Thus, in order to successfully implement systems theory, organizations need to make efficient enough models that rigorously follow the systems theory and also are inline with the organization’s own rules, policies and procedures. CHALLENGES WITH INTEGRATING TWO SYSTEMS –AS THE RESULT OF AN ACQUISITION AND AS THE RESULT OF A MERGER When a change is integrated in the organization, it is always resisted. Mergers and acquisitions are changes in the organizational structure that result when two organizational structures are combined. The challenges that are faced when two systems are integrated as a result of an acquisition or a merger consider asking the following questions: 1. Who should have the entire authority of the new entity? 2. What should be the new organizational processes (based on which organizational structure can be determined)? 3. What should be the new roles and responsibilities of the individuals? 4. Who should stay and who should be downsized from the organization? 5. How should the new organizational policies and procedures be redesigned considering both the companies? These questions need to be answered in order to create the new organizational structure because they determine the revised missions and visions of the merged or acquired entity based on which the company will work in the future. Ways in Which the Systems Change In Acquisitions and Mergers And Differences in the Two Systems Changes When an acquisition takes place, the company that is acquiring has the authority to integrate the systems of the two organizations. Mostly the CEO of the company acquiring the other company becomes the CEO of the new entity. Based on the new policies and procedures, the new roles and responsibilities are assigned to the employees. Mostly a high percentage of the employees of the company that is acquired are downsized. The company that has acquired has the upper edge and generally assigned higher designations. Usually the organizational structure of the company that has acquired the other becomes the organizational structure of the new entity. Whereas, as a result of the merger, it is the mutual decision of the companies that are merged that who should be the CEO of the new merged entity, what should be the new roles and responsibilities of the employees and what should be the new processes. Contrary to acquisition, as a result of a merger, usually a new organizational structure is formed and usually most of the employees are retained. A merger brings about significant changes in the internal environment and culture of the organization. A completely new entity is formed and usually the best practices of the two companies are adopted. Thus, the major difference in the organizational structure as a result of a merger or acquisition basically lies in the ‘authority’ of the new entity formed as a result of a merger or acquisition. Similarities However there are a number of differences in the two system changes, there are some similarities as well. Both the system changes incorporate change in the organization and the individual working of the employees is largely affected in both the systems. Both systems ultimately assign the authority to someone and both systems incorporate certain amount of downsizing of employees and promotions and demotions. References 1. Frank Baker (1973) Organizational Systems; General Systems Approaches to Complex Organizations. R. D. Irwin. 2. James C. Emery (1969) Organizational Planning and Control Systems: Theory and Technology. Macmillan. 3. N.K.Bose (2003) Multidimensional Systems Theory and Applications. Springer. 4. Richard Arvid Johnson, Fremont Ellsworth Kast, James Erwin Rosenzweig (1967). The Theory and Management of Systems. McGraw-Hill. 5. Walter Frederick Buckley (1967) Sociology and Modern Systems Theory. Prentice-Hall. 6. Yi Lin (1999) General Systems Theory: A Mathematical Approach. Springer. Read More