The Systems approach is based on the concept that an organization is a system.
A system is defined as a number of interdependent parts functioning as a whole for some purpose.
A system has 5 components:inputs, a transformation process, outputs, feedback, and the environment.
ENVIRONMENT Transformation process Input Output Feedback (Reenergizing the system) System Boundary Systems Approach to Management Organization as a System receives Input, transforms it through a Process for Output and Operates in an Environment (economic, regulatory, competitive, other forces)
Systems Approach to Management Systems Concepts
System Boundariesand Subsystems
Systems consist of numerous subsystems.
Each subsystem has elements, interactions with other subsystems, and objectives.
Subsystems perform specialized tasks for the overall system.
Systems and Sub-systems
System 1 College Finance Ops HR Mktg Sub-systems
Systems Approach to Management Inputs and Outputs
Outputs are a result of changed inputs
Outputs of one subsystem become inputs to another subsystem.
Outputs must adhere to standards to be useful or acceptable to the next subsystem.
Environment consists of people, organizations and other systems that supply data to or that receive data from the system
Managers at different levels perceive ‘Environment’ differently
Systems Approach to Management “Inputs”: 5 Ms of Management
Inputs(resources managers deal with):
Man: human resources, both inside and outside
Materials: raw material, goods (hard & software, processed or semi-finished) and services required to create the sellable end product
Machines: technology and expertise deployed towards the transformation process
Methods: systems, procedures and processes seamlessly put together for the transformation;
Measurement: score-keeping and in-process monitoring continuously with due feedback to keep on-course on time.
“Money” is required for generating all these Ms – managers need to acquire, deploy, generate and distribute money as a primary need for business
Systems Approach to Management Output for Stake-holders in Business: “Stake-holders”:
Shareholders: are the owners. They have put in their money in the enterprise, expecting better returns from it than from other ventures
Society: includes the State and local governments for the improvement of quality of life of its citizens
Suppliers: continuity of their enterprise depends on the success of the customer enterprise
Employees: livelihood depends on the success of the enterprise
Systems Approach to Management Output for Stake-holders in Business:
There is a “freedom of choice” (for association) between each of these stake-holders and the enterprise in the longer term:
But they sink or swim together in the shorter term
Length of term definition varies with individuals
Systems Approach to Management Management as a system transforms inputs:
by the process of
to accomplish pre-determined goals or objectives (based on stakeholders’ needs)
Systems Approach to Management Stakeholders Shareholders; Society; Customers; Employees; Suppliers Man, Machine Material, Method, Measurement Product/Services, Profits,Customer & Societal satisfaction, Other Long-term Goals Organizing Inputs (Goal Oriented) Outputs (External To Orgnzn.) Planning Staffing Controlling Leading Stake holder Feedback (reenergizing the system) EXTERNAL ENVIRONMENT(Opportunities, Constraints)
Planning "Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen" - Koontz and O'Donnell.
Planning involves selecting objectives or goals and the course of actions to achieve them:
Its is a rational approach to achieving pre-selected objectives - based on innovation, knowledge and purpose
Choosing the best from alternative course of action is integral to planning
Importance of Planning Planning provides directions Planning reduces the risks of uncertainty Planning reduces overlapping and wasteful activities Planning promotes innovative ideas Planning facilitates decision making Planning establishes standards for controlling.
Types of Plans Specify actions toachieve tactical plans(very short-term) OperationalPlans Steps for achieving strategic objectives(usually one year or less) TacticalPlans StrategicPlans Establish long-rangeobjectives
Types of Plans Mission / Purpose (Strategic Plans) The ‘reason for existence’ of an organization
Type of Plans Objectives/ Goals The end towards which activity of an organization is aimed, e.g. For a Business enterprise – profit, surplus creation; For an vocational NGO – to provide means of livelihood to maximum people in the area they are serving Strategies Determination of the long term objectives and adoption of a course of action Gives a frame work for linked action-plans, communicated systematically to guide thinking and actions.
Type of Plans Policies “Plans” that are general directional statements (or understandings) that guide/help in decision making: Repeat decisions taken ‘reflexively’; Delegation of tasks without loss of control Some discretion is permissible depending on circumstances thus encouraging initiative within limits and situational adjustments; Issues with “Policy” Seldom documented in writing Subject to interpretations
Type of Plans Procedures Plans that are chronological sequences of required actions: task-oriented in nature; Cuts across department boundaries (sub-systems) in an organization: e.g. attendance, applying for leave Procedures and policies are inter related: e.g. authorization for paid leave Rules Specific actions or non-actions allowing no discretion What is acceptable and what is not?
Type of Plans Programmes Action plans (mainly non-routine or for changed activities) including, task assignments, steps to be taken, resources to be deployed etc. to achieve a (new/renewed) goal; Primary program may require supporting programs, spreading across the enterprise; Perfect coordination between supporting & primary programs essential to avoid delays, unnecessary costs and expected roll-out. Programs are a complex of (sub)goals, policies, rules and other elements necessary for the course of action e.g. obtaining ISO certification.
Type of Plans Budgets A statement of expected results expressed in “Numerical terms” e.g. financial operating budget = “profit plan”; Budgets enforce precision in thinking: Making a budget is ‘planning’ by itself; Encourages innovation – a “different” way to work Budgets serve for ‘Control’: Enforces discipline in execution of plans; Instills cost consciousness; Makes people (constantly) plan!