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This section introduces systems theory, a set of concepts and relationships describing the properties and behaviors of things called systems�organizations, groups, and people, for example. Systems are viewed as unitary wholes composed of parts or subsystems; the system serves to integrate the parts into a functioning unit. For example, organization systems are composed of departments, such as sales, operations, and finance. The organization serves to coordinate behaviors of its departments so that they function together in service of a goal or strategy. The general diagnostic model based on systems theory that underlies most Organizational Development is called the �open systems model.�
Organizations as Open Systems
As shown in the model above, the open systems model recognizes that organizations exist in the context of a larger environment that affects how the organization performs and in turn is affected by how the organization interacts with it. The model suggests that organizations operate within an external environment, takes specific inputs from the environment, and transforms those inputs using social and technical processes. The outputs of the transformation process are returned to the environment and can be used as feedback to the organization�s functioning.
The open systems model also suggests that organizations and their subsystems�departments, groups, and individuals�share a number of common features that explain how they are organized and function. For example, open systems display a hierarchical ordering. Each higher level of system is composed of lower-level systems; Systems at the level of society are composed of organizations; organizations comprise are composed of groups (departments); and groups comprise are composed of individuals. Although systems at different levels vary in many ways�in size and complexity, for example�they have a number of common characteristics by virtue of being open systems, and those properties can be applied to systems at any level.
The following open systems properties are described below: environments; inputs, transformations, and outputs; boundaries; feedback; equifinality; and alignment.
Environments Organizations environments are everything beyond the boundaries of the system that can indirectly or directly affect performance and outcomes. Open systems, such as organizations and people, exchange information and resources with their environments. They cannot completely control their own behavior and are influenced in part by external forces. Organizations, for example, are affected by such environmental conditions as the availability of labor and human capital, raw material, customer demands, competition, and government regulations. Understanding how these external forces affect the organization can help explain some of its internal behavior.
Inputs, Transformation, and Outputs Any organizational system is composed of three related parts; inputs, transformations, and outputs. Inputs consist of human resources or other resources, such as information, energy, and materials, coming into the system. Inputs are part of and acquired from the organization�s external environment. For example, a manufacturing organization acquires raw materials from an outside supplier. Similarly, a hospital nursing unit acquires information concerning a patient�s condition from the attending physician. In each case, the system (organization or nursing unit) obtains resources (raw materials or information) from its external environment.
Transformations are the processes of converting inputs into outputs. In organizations, a production or operations function composed of both social and technological components generally carries out transformations. The social component consists of people and their work relationships, whereas the technological component involves tools, techniques, and methods of production or service delivery. Organizations have developed elaborate mechanisms for transforming incoming resources into goods and services. Banks, for example, transform deposits into mortgage loans and interest income. Schools attempt to transform students into more educated people. Transformation processes also can take place at the group and individual levels. For example, research and development departments can transform the latest scientific advances into new product ideas, and bank tellers can transform customer requests into valued services.
Outputs are the results of what is transformed by the system and sent to the environment. Thus, inputs that have been transformed represent outputs ready to leave the system. Group health insurance companies receive premiums, healthy and unhealthy individuals, and medical bills; transform them through physician visits and record keeping; and export treated patients and payments to hospitals and physicians.
Boundaries The idea of boundaries helps to distinguish between systems and environments. Closed systems have relatively rigid and impenetrable boundaries, whereas open systems have far more permeable borders. Boundaries�the borders, or limits, of the system�are easily seen in many biological and mechanical systems. Defining the boundaries of social systems is more difficult because there is a continuous inflow and outflow through them. For example, were are the organizational boundaries in the following case? An individual customer installing a wireless home network get a massage that the software is conflicting with another piece of software from the Internet service provider (ISP). The customer calls the network software provider who talks the ISP technical support people and provides technical support and suggestions that resolve the conflict. The customer feels completely supported by the process and never knew that the network software technical support person e or she was talking to was in India. The continued development of the Internet will continue to challenge the notion of boundaries in open systems.
The definition of a boundary is somewhat arbitrary because a social system has multiple subsystems and the boundary line for one subsystem may not be the same as that for a different subsystem. As with the system itself, arbitrary boundaries may have to be assigned to any social organization, depending on the variable to be stressed. The boundaries used for studying or analyzing leadership, for instance, may be quite different from those used to study intergroup dynamics.
Just as systems can be considered relatively open or closed, the permeability of boundaries also varies from fixed to diffuse. The boundaries of a community�s police force are probably far more rigid and sharply defined than those of the community�s political parties. Conflict over boundaries is always a potential problem within an organization, just as it is in the world outside the organization.
Feedback As shown in the model, feedback is information regarding the actual performance or the output results of the system. Not all such information is feedback, however. Only information used to control the future functioning of the system is considered feedback. Feedback can be used to maintain the system in a steady state (for example, keeping an assembly line running at a certain speed) or to help the organization adapt to changing circumstances. McDonald�s for example, has strict feedback processes to ensure that a meal in on outlet is as similar as possible to a meal in any other outlet. On the other hand, a salesperson in the field may report that sales are not going well and may insist on some organizational change to improve sales. A market research study may lead the marketing department to recommend a change to the organization�s advertising campaign.
Equifinality In closed systems, a direct cause-and-effect relationship exists between the initial condition and the final state of the system: When a computer�s �on� switch is pushed, the system powers up. Biological and social systems, however, operate quite differently. The idea of equifinality suggests that similar results or outputs may be achieved with different initial conditions and in many different ways. This concept suggests that a manager can use varying degrees of inputs into the organization and can transform them in a variety of ways to obtain satisfactory outputs. Thus, the function of management is not to seek a single rigid solution but rather to develop a variety of satisfactory options. Systems and contingency theories suggest that there is no universal best way to design an organization. Organizations and department providing routine services, such as Earthlink�s, AOL�s, or Microsoft�s Internet services, could be designed quite differently and still achieve the same result. Similarly, customer service functions at major retailers, software manufacturers, or airlines could be designed according to similar principles.
Alignment A system�s overall effectiveness is partly determined by the extent to which the different subsystems are aligned with each other. This alignment or fit concerns the relationships between the organization and its environment, between inputs and transformations, between transformations and outputs, and among the subsystems of the transformation process. Diagnosticians who view the relationships among the various parts of a system as a whole are taking what is referred to as �a systemic perspective.�
Alignment refers to a characteristic of the relationship between two or more parts. It represents the extent to which the features, operations, and characteristic of one system support the effectiveness of another system. Just as the teeth in two wheels of a watch must mesh perfectly for the watch to keep time, so do the parts of an organization need to mesh for it to be effective. For example, General Electric attempts to achieve its goals through a strategy of diversification and a divisional structure that focuses attention and resources on specific businesses such as medical systems, lighting, and consumer electronics. A functional structure would not be a good fit with the strategy because it is more efficient for each division to focus on one product line than for one manufacturing department to try to make CT scanners, light bulbs, and refrigerators. The systemic perspective suggests that diagnosis is the search for misfits among the various parts and subsystems of an organization.
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