System approach to management
The word ‘System’ is taken from a Greek language which means to bring together or to combine.
A system is a set of interrelated parts, which work together to achieve certain goals or objectives.
Ludwig von Bertalanffy is called the Father of System Approach.
According to Sir Ludwig von Bertalanffy,
“In order to understand an organized whole, we must know both the parts as well as the relation between them.”
The concept of system approach to management:
Image credits © Pablo Alfieri.
- Open or closed systems : Systems may be either open or closed:
- An open system is one, which depends on the outside environment for survival.
- A closed system does not interact with the environment.
- Subsystem : The full system is made up of many parts. Each of these parts is called a subsystem. A system may be a subsystem of a larger system. For e.g. A department is a subsystem of a plant. A plant is a subsystem of a company.
- Synergy : Synergy means that the whole is greater than the sum of its parts. In an organization, when different departments co-operate and interact, they become more productive. This is called synergy.
- Defined boundaries : Each system has a boundary that separates it from its environment. In case of a closed system, the system boundary is rigid. However, in an open system, the boundary is flexible. A business organization, has boundaries with many external systems like creditors, suppliers, customers, government agencies, etc. The system is inside the boundary, the environment is outside the boundary.
- Feedback mechanism : A system can adjust itself to the changing environment through the feedback mechanism. Feedback helps the system to find out and correct its mistakes.
- Multidisciplinary : Management system uses information from many disciplines such as psychology, sociology, ecology, economics, mathematics, statistics, operations research, systems analysis, etc. Therefore, it is multidisciplinary in nature.
- Consideration of whole system : No part of the system can be fully studied and understood without properly understanding all of its parts. So instead of dealing separately with different parts of one organization, the manager must study the entire organization as a whole. For example, in order to understand the working of the finance, production or marketing department, he/she must understand the company as a whole. It is because the activity of any one part of the company affects the activity of its every other part.
- Input-output system : A business organization is an input-output system. Inputs consist of human, physical and financial resources obtained from the environment. These resources are converted into outputs of products and services.
The contributions of system approach to management:
- Under a system approach, managers have a good view of the organization.
- It gives importance to the interdependence of the different parts of an organization and its environment.
- It foretastes consequences and plan actions.
- Systems thinking warns managers against adopting piecemeal approach to the problem-solving.
Articles to know more about other approaches to management: