Management from the perspective of systems theory

1. Management from the perspective of systems theory Peter Andras and Bruce G Charlton University of Newcastle peter.andras@ncl.ac.uk bruce.charlton@ncl.ac.uk

2. Overview • Management theories • Abstract communication systems • Management systems • Discussion • Conclusions

3. Management theories

4. Management phenomena • Usual theories focus on phenomenological aspects: • Types of behaviours of managers • Roles of managers

5. Theories • Fayol: planning, organising, commanding, coordinating and controling • Mintzberg: informational, decisional and leadership roles

6. Charisma • Charismatic leader: • empathically communicate with a large group of followers • motivate followers to overcome temporarily their individual limitations • find convincing candidate solutions of difficult complex problems in relatively short time • Hard to treat in the context of usual theories

7. Complexity vs. standardisation • Management theories typically praise standardisation and aim to decrease complexity • Some more recent theories claim important roles for complexity • Which is better ?

8. Why isn’t this good ? • Preferred viewpoint • Imposed organisational values  restricted validity

9. Abstract communication systems

10. Communications Sender Signal Receiver Referenced communications

11. Communication systems • Communication system: dense set of inter-referencing communications • The communication units are NOT part of the communication system Communication system

12. System and environment • All other communications outside the system constitute the environment • System: communicates about itself, and in a complementary sense about the environment • System: defined by its own language = rules of referencing

13. Example: science • Scientific communications: • Communications and notes about experimental measurements • Scientific papers • Tables of scientific data • Scientific communications refer to other scientific communications • Science: the dense set of inter-referencing scientific communications • Science language – is part or is it not part of science

14. Reproduction and expansion • Systems reproduce by generating new communications according to their own rules • Environmental constraints • Systems expand if they describe/predict successfully their environment • Competition by expansion

15. Example: economy • Low inflation economy – the monetary system describes well the economy and allows appropriate pricing of goods and services • High inflation economy – mismatch between the actual economy and the one predicted/described by the monetary system • Low inflation economies follow stable growth, high inflation economies fluctuate and may recess

16. Limits of expansion • Length of non-random sequences of referencing • Longer sequences – better description/prediction of the environment p1 p4 p2 p3 p3’ p4’ p2’ p1’

17. Example: companies • Company 1: paper handling of data • Company 2: electronic handling of data • More reliable electronic data handling allows better analysis and prediction of the environment and faster growth for Company 2

18. Subsystems and simplification • Subsystems: restricted referencing rules  dense cluster of inter-referencing communications following stricter rules within the system • Simplification: reduced set of communication symbols  less ambiguity in referencing • Subsystems, simplification  faster expansion of the system

19. Example: small and large companies • Small company: no separation between types of activities (marketing, HR, strategy) • Large company: many separate specialized units, speaking specialised simplified languages • Large companies grow faster in average than small companies (below the limit of their growth)

20. Memory • Memory: reproduction of earlier communications • Memories allow direct reference to earlier communications  extension of referencing sequences  faster expansion • Example: written text – memory of spoken words  expansion of science with the advent of printing

21. Information subsystem • Newly generated memory communications referencing other memory communications • Subsystem of memory communications  information subsystem • Information subsystem increases the expansion potential of the system

22. Example: developing company • Self-employed: small scale business • Products, services: storage of information  planning, organising and scheduling subcontractors: information subsystem  company • Company: faster growing larger scale business

23. Identity subsystem • Information subsystem: communications about memories that can be referenced as memories • Identity subsystem: information subsystem that generates communications, which are referenced regularly and guide the generation of correct communications, assuring the continual reproduction and expansion of the system • Systems with identity subsystem reproduce and expand faster than systems without such subsystem

24. Example: rule of law • Politics – memory: laws  legal system • Rule of law: the legal system changes slowly and provides stable references for political communications over long periods  the legal system acts as an identity subsystem for the political system • Frequently changing legal system: no stable references for political communications  there is no identity subsystem for the political system • Countries with rule of law develop faster than countries with frequently changing legal system

25. Management systems

26. Organisations • Organisation: system of human communications (including communications with and using artefacts) • Memories of organisations: products, services, contracts, manuals, data collections, etc.

27. Management and power • Phenomenological link between management and power/authority • Systems theory: management = operations with memories of the organisation = generation of new memory communications that reference other organisational memories

28. Management: information subsystem • Management: system of memory communications  information subsystem of the organisation • Organisations with management subsystem reproduce and expand faster than organisations without management

29. Phenomenology: information processing • Management: information subsystem: • Collection of information about the environment and the organisation • Processing of information within the organisation • Generation of information to guide activities of organisation and for the outer world

30. Management: identity subsystem • Management: information subsystem  provides regular references for organisational communications (e.g., handbooks, contracts, regulations)  management turns into an identity subsystem • Organisations with management acting as identity subsystem reproduce and expand faster than organisations without such management subsystem

31. Phenomenology: identity operations • Management: identity subsystem: • Identity definition: what is and what is not the organisation (e.g., regulations) • Identity checking: do actions within the organisation comply with the identity definitions (e.g., evaluation reports) • Identity enforcement: assuring that actions and behaviours within the organisation comply with identity definitions (e.g., execution of plans, disciplinary actions)

32. Management subsystems • Subsystems: • Marketing • Financial management • Strategic management • Human resources management • Subsystems have their own restricted language and facilitate the reproduction and expansion of the organisation

33. Discussion

34. Growing management • Management usually grows faster than the rest of the organisation • Management theories do not support usually this excessive growth and intend to reduce it • Common sense logic is also against over-bureaucratisation

35. Management should grow • Systems theory says that management should grow in order for the organisation to grow • The organisation may grow in many case by growing its management and this growth triggers further growth of the organisation

36. Maladaptive growth • Not all growth is good • Growing management is a response of the organisation system under stress • Lack of competition allows maladaptive growth of management

37. Charismatic leaders • Charismatic leader: • empathically communicate with a large group of followers • motivate followers to overcome temporarily their individual limitations • find convincing candidate solutions of difficult complex problems in relatively short time • Hard to treat in the context of usual theories

38. Changing organisation • Organisations of which environment description shows significant mismatch with their actual environment • Such organisations need major changes • Charismatic leaders are good choice to lead such changes

39. Charismatic leadership • Systems theory: charismatic leaders are good in making some sense of complex situations  they generate communications that induce a rearrangement of the organisation system • Charismatic leaders may decrease slightly the complexity of problems, leading to better match between the description of the environment and the actual environment • Such innovations may not be very useful in well established organisations without major mismatch between their environment description and their actual environment • Charismatic leaders should be appropriate in organisations living in constantly rapidly changing environments

40. Complexity vs. standardisation • Many management theories argue in the favour of standardisation • Some theories argue for maintaining complexity in organisations

41. Complexity • Systems theory: environment is infinitely complex • Organisational complexity: to what extent is the infinitely complex environment described by the organisation • Proxy measure: size of the organisation

42. Standardisation and growth • Standardisation  simplification  faster system reproduction and expansion • Standardisation leads to faster growing larger and more complex system • Also possible to have bad standardisation

43. Good and bad complexity • Generally increased system complexity is good, and appropriate standardisation leads to increased organisational complexity • Complexity may grow also by slow expansion of the organisation which does not fit to its environment (e.g., maladaptive growth in the lack of competition)

44. Conclusions

45. Conclusions • Abstract communication systems theory can be applied to analyse organisations and management – great advantage: no fixed phenomenological viewpoint • Management: information subsystem of the organisation  identity subsystem of the organisation • Applications: management growth, charismatic leadership, complexity vs. standardisation