A Systems Approach in Management Decision-Making - Coursework Example

Management decision making (MDM) Introduction The role of management is so critical in today’s global economy that it is perhaps the sole or at the least, the most important factor in deciding the success of an organization. It is true that the role of management was important throughout the history of an organized society, and there would have existed some informal theories and systems of management. In the days before the industrial revolution, societies were more isolated in nature and when work was more manual than mechanized, most organizations were small and easily managed with coercion being a regular tool used to manage the workforce. But in the 21st century, with more and more countries opening up their markets for international companies and size being considered very important to remain competitive, the role of management has become extremely complex. This paper deals with primarily the systems based approach to management and is divided into two sections. The first section emphasizes on problems in the workplace, how it can lead to metaphors and the importance and effectiveness of metaphors in an organization. It then goes on to applying a suitable method of Systems of System Management to solve these problems in the context of a real life situation. Metaphors are used extensively in everyday life and its impact on the work place is tremendous. This can be seen by the fact that there are several theories in management that are metamorphic names. The second section will deal exclusively with the systems approach of management and its impact on management effectiveness and organizational learning. It wasn’t until the start of the Industrial that serious studies on management and management behavior began to evolve. Well known among these were Frank and Lillian Gilberth and their time and motion studies, Max Weber known as the father of Modern Sociology, F W Taylor who was instrumental in increasing worker productivity through his studies on motion, Henry Fayol, Henry Gantt, Chester Bernard and Mary Parker Follett. All the above theories are classified under the Classical School approach. It was after 1950 that the human factor in an organization was thought to be of importance and this resulted in the human resources theories, systems theories and the contingency theories. “Modern managers use many of the practices, principles, and techniques developed from earlier concepts and experiences. The Industrial Revolution brought about the emergence of large-scale business and its need for professional managers.” (Allen 1998). Part A Systems Approach to Management: Modern management theories like the systems theory emerged due to the inadequacy of the earlier theories to be applied on the organization as a whole. For example, the theory of F W Taylor concerns itself with production and has no real value in the administrative aspects of an organization. But in the systems approach the organization and its various components are considered to be important. It is accepted that organizations are open systems, which means that external factors do influence the organizations and survival depends not only on internal factors but includes the influences of outside factors. The organization, in most instances has no control over the external factors. They include competition, government regulations, availability of raw materials, and consumer demand among many other things. Factors such as dynamism of the organization, the motivation of employees, the multi dimensional nature, the need to be adaptive and level of uncertainty are considered to be a nature of an open system. The Systems approach was first formulated in the 1940’s by Ludwig Von Bertalanffy and he called it The General Systems Theory and was published in his book bearing the same name. But much earlier, Russian philosopher Alexander Bogdanov in his book Tektology had put forth ideas that were later understood to be relevant to the modern systems approaches. “Bogdonov’s three volume Tektology was published in Russia between 1912 and 1927. It anticipated many of the themes later identified with general system theory although, at the time, it virtually had no impact”. (Jackson 2000, p. 51). Later more and more theories evolved. Systems theory has its share of criticism as well. It is considered to be general in nature and that it is just a combination of the earlier theories of management. It is to be mentioned here that a systems approach is not related to management alone and that such a theory exists in other disciplines like science and sociology. “Research in the field of management is continuously expanding. During the last 40 years management writers have been primarily concerned with integrating the findings of scientific management, principles of management and human relations movements.” (Manoj 2008, p. 28). Metaphors in Management: Metaphors are used to describe or refer to something, probably to dramatize it, by using words that have no connection with the thing being referred to or described. To describe or refer to a brave and daring personality as ‘he is lion’ is a metaphor, whereas as the words ‘he acts like a lion ‘ is a simile. The American Heritage Dictionary defines metaphor as” A figure of speech in which a word or phrase that ordinarily designates one thing is used to designate another, thus making an implicit comparison, as in "a sea of troubles" or "All the worlds a stage" (Metaphors. 2008). Metaphors are used extensively through the world by people from all walks of life. People who use it the most are probably politicians, leaders, poets and authors. The words “mother of all battles” used by Saddam Hussein to refer to the war with the United States over Kuwait was a highly publicized metaphor. Similar to the use of metaphors in other fields, the business world too makes extensive use of it. Using them makes the point of reference dramatic and well understood without using too many words. Metaphors can be good and bad depending upon the circumstance in which they are used. If the situation prevailing in an organization is bad, words with negative meanings are used as metaphors and vice versa. They can also be used to correct a bad situation into a good one and a good one to bad. An example of how metaphors were used to transform the Oregon Symphony Orchestra which was plagued by most of the problems found in an organization is given here. With the assistance of Saul Eisen, a professor at Sonoma State University, they gave their organizational structure the metaphor, ‘starfish’. “With its implications of interconnectedness between equally important parts, the starfish became a concrete symbol of the Oregon Symphony’s emerging core values.” (Organizational Change. 2005). The metaphor and constant effort and interaction among members helped the orchestra to overcome its problems. Metaphors in business are used when a particular strategy, vision or philosophy of a company is to be communicated to its employees, stakeholders or to the public. Case Study of problems in ABC Ad Works and resulting metaphor: The Company in this study, ABC Ad Works, is an advertising company. It employees about 40 people, with a general manger who is also the owner of the company. It was started in 2001 as a one man show by the present owner and grew to be a well respected company in the town where it is situated. Out of its 40 employees 10 are copy writers, 12 are artists who use computers in their work, and the rest are office staff. The work they get is from the local business establishments of the locality like shops, banks and small manufacturing units. Business was growing steadily and peaked in 2005. Instances of reduction in the quality of output and delay in completion of work resulted in complaints from customers .and this prompted the owner to go in for an analysis which is given in this case study. On analysis the he following problems were discovered out of which one major and one minor problem is listed below. a. The owner refused to employ more artists and copy writers during its growth period resulting in over work. Advertising is a creative field and heavy work will naturally tell on creativity. The employees believed that it was due to the management’s reluctance to pay a good salary to employ creative people. Moreover, the owner being an artist himself had many of the eccentricities found in such people. The main problem with him was his temper which had resulted in his firing of staff for minor reasons. This situation plus the fact that the owner was a short man prompted the employees to refer to their company as The Hitler Ad Works. b. A minor problem that existed was between the creative section and the office staff. Even though the artists had an excellent relationship among themselves, both these groups were unable to relate to each other. The office also felt that artists did not give importance to financial aspects. They were referred to as the Hole in the Bucket group. Problem (b) was not a major issue in the falling revenues of the company since, despite having an uneasy relationship; both groups did not let it affect their work in any way. System of Systems Methodology: Just like modern theories like the systems theory evolved because of the inadequacy of older theories, the System of Systems methodology too was put forth because of the shortcomings in the systems theories. This theory was formulated by Michael C Jackson and Paul Keys at a University of Hull research program in 1984 and was published in the book titled ‘System Approaches to Management’. The theory is a theoretical approach basically to explain how all systems theories are related to each other and also in formulating an effective way in which a particular theory can be used in the contest of a particular problem. The authors then formed a grid with the system and one side of the grid and the complexity of problems of the participants on the other side of the grid. The theory also gives suggestions as to which system methodology is to be used in the six situations shown in the grid. The System of Systems Methodology Grid Relationship between Participants Unitary Pluralistic Coercive System Simple Simple-Unitary Simple-Pluralistic Simple-Coercive Complex Complex-Unitary Complex-Pluralistic Complex-Coercive An explanation of individual components of the grid: As mentioned earlier, the relationship between participants is given in columns and the system in rows. The system is further subdivided into simple systems and complex systems. A system is the sum total of all the different departments of an organization. If an organization is made up of five departments comprising of production, sales, accounts, advertisement and public retaliations, here the system is made up of all the departments put together. Simple and Complex Systems: Simple systems refer to an organization that is not complex in any way and there is no difficulty in understanding it. A simple system will not have multiple departments and generally will have a small number of employees. A small shop owned by a single individual is an example of a simple system. A complex system on the other hand will have multiple departments, with a hierarchical structure and will be employing a large number of people. All multinational companies are examples of a complex system. The number of problems that arise in a complex system will be much higher than what is found in simple systems and will be more difficult to solve. A multinational company will have employees of different nationalities and their social backgrounds will be very different which can be a cause of a lot of complex problems. The prohibition of wearing of turbans by the Sikh community of India in police forces in Canada has created problems in that country. It can also be said that a complex system will have a comparatively larger share of metaphors associated with it, not just because it has more employees, but also because it is more visible. The degree of complexity of the problems among the participants is divided into three, unitary, pluralistic and coercive. Unitary denotes that there is no disagreement among the participants about the problem or issues that have to be resolved. Suppose the problem is lack of availability of drinking water for the employees, there will be complete agreement amongst all the of them that this problem can be solved by availability of adequate water. A pluralistic problem is where there is no alignment among the participants as to how to solve the problem. This could be the most difficult situation among all thee classifications. The reason is that in a pluralistic situation the participants involved are, in most cases not in a position to dominate the other. Inequality in allocation of funds to different department is a problem of this nature. Here the official capacity of the departmental heads is quite similar in nature and coercion will happen depending on the nature of each department head. If all department heads or at least a few of them are equally strong willed, it will be difficult to solve the problem. Coercion happens when control or authority of the participants vary. A problem involving a senior manager and a worker will be of this nature. An explanation of the grid: Simple - Unitary: The system is simple and the problem is unitary. This is the easiest situation in the whole grid. The problems are well understood by all parties concerned because of the simplicity of the system and the fact that the solution is agreeable to all parties concerned. Complex – Unitary: The difficulty in this grid lies in the fact that the nature of the problem need not be easy to grasp by the participants. But once the problem and its magnitude are understood by parties concerned, it will be easily solved. Simple – Pluralistic: In this grid, the problem is easily understood by everyone affected, but there is no agreement among them as to how the problem is solved. There is no coercion involved and finding a solution will be difficult. Complex – Pluralistic: This is the most problematic component in the whole grid. The issue involved is difficult to understand which by itself is a problem and it is compounded by the fact that once identified, a consensus as to its solution will be difficult to attain. Simple – coercive and complex coercive: Both these situations are taken together since the difference between simple and complex systems in the current context have already been explained. In both cases it will be seen that the opinions of those being coerced have not come out in the open till the time of the problem solving process. “Before moving on, one final point needs to be made. Jackson (1990) stresses that the System of Systems Methodologies is most expressively not a ‘rule book’ to be followed systematically”. (Midgley 2000, p. 222). According to the SOSM grid, the problem in ABC Ad Works will fall in the simple-coercive category because the company has a simple structure, and the problem is coercive in nature. Every involved agree that employing more creative people will solve the problem, but the nature of the owner prevents them from having a discussion. Since human emotions are involved to a large extent, a heuristic analysis would be ideal. Problem solving using Soft Systems methodology: Because of the nature of the problems in the case study, the method formulated by Peter Checkland called the Soft Systems Methodology is used. This methodology is used when human element is present and the problem is coercive in nature. The following steps are involved in the Soft Systems methodology. 1. The problem is investigated 2. Visually express the problem through Rich Pictures. Rich picture is a visual representation of all relevant information. In this study it is assumed that Rich Pictures are formed and no sample is incorporated here. “The idea of using drawings or pictures to think about issues is common to several problem solving or creative thinking methods (including therapy) because our intuitive consciousness communicates more easily in impressions and symbols than in words.” (Rich Pictures). 3. Formulate root definitions. These are ways in which a problem is viewed from a different perspective or angle. There are six components in a root definition and is referred to as CATWOE a. Customers comprises of all people deriving a benefit or disadvantage from the system. So employees and owners of the company are also included here. b. Actors: Anyone who works in the system are referred to as actors c. Transformation process: The process of transforming raw materials to finished goods. d. Worldview implies as to what the company is, viewed by outsiders e. Owner f. Environmental constraints 4. Forming conceptual models. 5. Comparison of Conceptual models and Real Picture. 6. Possible design Changes:. 7. The required action based on recommendations. “The Soft Systems Methodology (SSM) from Peter Checkland is a qualitative technique that can be used for applying systems thinking to non-systemic situations. It is a way of dealing with problems in which there is a high social, political and human activity component.” (Weeks 2008). SSM analysis of ABC Ad Works: Investigation: A thorough investigation of the employees, owner, clients and suppliers were conducted and the autocratic behavior of the owner was noticed. Rich picture: A rich picture incorporating all relevant information was formed. It denoted a number of problems according to its employees and the owner. It was clear from it that two way communications existed only in areas of advertising. There was no communication between management and staff regarding salary, working conditions, work load etc. Root definition using CATWOE: Customers Owner, Employees, Suppliers, Customers Actors Employees, Owner Transformation Creating advertisements for release in newspapers and publications as per specification of customer orders World View Advertising agency in an open market Owners Owner (Sole proprietorship) Environment Localized, existence of competition, Presence limited to newspapers and publications, and brochures/pamphlets The ABC Ad Works is a sole proprietorship, in the advertising industry. Its area of operation is very limited, and it has no presence in areas like TV commercials and short ad films. Problem area is limited to the lack of two way communication in the company. It is this problem that is the root cause of other problems faced by the company. Conceptual model: A situation where there is more interaction between the employees and the owner of the company. The owner should change his behavior, at least to the extent of enabling two way communication regarding all aspects of the business. Comparison of conceptual model and rich picture: There has been no concern as to the quality of the work produced by the company till workload increased. A comparison the Real Picture shows that the company needs a change in the attitude of its owner and more employees are appointed. Possible design changes: No such changes are recommended here since the problem can be sorted out through mutual dialogue. The issued does not concern outsiders like clients and suppliers and apart form the current problem, the working of the firm is satisfactory. Recommended actions There should be immediate interactive sessions between the employees and the owner. A public relations exercise with customers who have been negatively affected by delaying of and poor quality of output is necessary. Once this is initiated, and orders start to increase, employ more create staff to cope up with the workload. Part B Systems approach and management effectiveness Systems approach to management refers to the concept whereby the whole organization is regarded as a system which is divided into several sub-systems. The subsystems are the major activity points in the whole system. Proper execution of all the systems will make the organization system work effectively. If any of the subsystems work improperly the ineffectiveness will be reflected in the whole organization system. “The management system is composed of a number of parts that function interdependently to achieve a purpose.” (Kotelnikov 2008). All the subsystems of management function effectively by making proper interactions with the outside world or the external environment that includes the public, customers, suppliers, etc. The systems approach was emerged in order to attain certain objectives. The motive behind introducing a system is to introduce specialization, to reduce complexity and to bring co-ordination. When many subsystems are employed in the organization each section will gain expertise in performing their task. This will help to bring out better results in the organization. When the activities are specialized each person in the organization will become aware of his duties. This will avoid chaos and confusion in the organization and there will be uninterrupted performance of activities in the organization. A system is composed of two components ‘Elements and Processes.’ Elements refer to those activities that are measurable. These activities can be easily identified and located. Processes refer to the result of any particular activity. The processes make changes to the different elements in the organization. The processes in an organization cannot be easily located as it changes from one form to another. A better systems approach first involves identifying the processes that are to be carried on. After identification of the processes these are to be understood properly before implementing. “Identifying, understanding, and managing interrelated processes as a system contributes to the organizations effectiveness and efficiency in achieving its objectives.” (System approach to management. 2002). Many factors are to be considered while developing an organization system. Some of the factors that are to be considered are given below. These are to be carried on in a proper sequence. Awareness about the customer needs: Every activity of an organization is aimed at attracting more customers. Therefore while developing an organization system the customer needs are to be considered. If the system is unable to meet the needs of the customers the system will fail to deliver the ultimate result. Proper relations between different processes: It should be noted that in the organization the main process is actually divided into different sub-processes. Some of the sub-processes are sales, marketing research, communication, financing, production etc. All these processes are again sub divided into different sections depending upon their nature. Therefore one process is very closely related to the other. Ineffectiveness in any of the sub processes will create problems in the achievement of the objectives. Along with that the proper sequence in which every activity to be carried on must be properly understood. It is not only necessary that the entire sub functions are to be carried but also the time at which it should be done is also a necessity. Better understanding of each activity: Better understanding of each activity is another essential requirement. This involves clearly understanding what a particular process involves. Identification of such core activity will help the performer to perform it better. In all the sub activities certain key factors are present that will lead to its success. Those key factors are to be identified so that the process can be implemented properly. Make judgments on effectiveness and efficiencies: This is the fourth requirement that contribute to the success of organization system. Both effectiveness and efficiencies are required for achieving the objectives of the organization. There are minute differences between effectiveness and efficiency. Effectiveness refer to the doing things well whereas efficiency refers to doing things with the least possible effort. Both are important on the organization’s systems perspective. Systems approach to management is beneficial for the organization in many ways. By adopting a systems approach the areas that are needed to be focused will be easily identifiable. This will lead to greater focus on the core activities. Proper coordination of the activities will lead to proper achievement of the objectives. When the activities are assigned to specific persons they will better understand their purpose in the organization. They will also be aware of the contribution to be made by them for successfully carrying on the activities. When the people are aware about their role they get motivated and the organization can extract the best from them. This way the system will be able to make sure of one of their requirements that are effectiveness and efficiency. The employees will not only work effectively but also efficiently. Under the systems approach a better controlling effort will be initiated that will lead to continuous improvement in every processes. This continuous evaluation and measurement will help to improve every sub systems of the organization. Systems approach has greater contribution to the organizational effectiveness and organizational learning. As mentioned earlier effectiveness in the functioning of an organization is very essential. The effectiveness can be achieved by better understanding of the functions to be carried on at every level in the organizational system. Organizational learning refers to the way the organization adapts to the changes that happens in the organization from time to time. Organizational learning is a field that combines the external knowledge and the internal knowledge of the organization. The internal knowledge of the organization refers to the knowledge of the individuals working in the organization. The external knowledge refer to the information that the organization gather from outside from the interactions that is being done with them. “It is also about helping employees to find and establish career paths within the organization and ensuring that the workplace is somewhere to be enjoyed as well as to work.” (Holland 2008). Organizational learning is about imparting knowledge (new information and its application) to the employees. Organizational learning helps the employees to learn new things and develop their skills for performing their job in the easier manner. This makes the employees climb up the ladder in their career within the organization. Organizational learning is a useful tool in an organization to improve its performance. It makes the organization up to date. It makes the organization equip new methods of operation. “Managers see OL as a powerful tool to improve the performance of an organization.” (Beck 1997). The reasons for changes in an organization is mostly the changes in the external environment. In business organization knowledge management is very closely associated with organizational learning. An organization that ensures better learning atmosphere helps to develop their man power and will ultimately result in the transformation of the organization itself. “A Learning Organization is an organization which facilitates the learning of all its members and continuously transforms itself.” (Learning organizations and organizational learning. 2008). One of the important benefits of organizational learning is that it will help the organization to detect any errors in its operation. Detection of any such errors will help the organization to avoid the happening of any errors in future. The critical issues that an organization faces in organizational learning are social, ethical and organizational. In the social issue the impact of the behavior of the society is definitely seen in the organization. The second major issue is how to cultivate a better ethical environment in the organization. The organizational level issues refer to the way organization deals with the learning process. There are two main problems existing in ABC Ad Works. The major problem in the company is the behavior of the boss towards the employees. He is at times very rude towards the subordinates. Since the employees in the organization are insufficient to handle the work load the quality of the work is also being affected. The second problem in the organization is the lack of cooperation between the creative and office staff. Both the problems have its effect on organizational learning and organizational effectiveness. Organizational effectiveness can only be achieved only when the employees are motivated enough to perform their job. In the present case the motivation level of the employees are very low. The employees are in the pool of work load. The number of employees is not balanced with the quantum of work. Therefore, an employee has to strive hard to finish maximum work during the stipulated time. When employees try to finish more and more work within a limited time the quality of work get suppressed. Organizational effectiveness is characterized by better work, motivated employees and better working conditions. Therefore, organizational effectiveness is almost absent in the case. In order to improve the quality of the work the employees will have to focus more on it. But in this case the employees are not able to concentrate much on every work as the work load is higher. Better communication and understanding among the employees are very essential for improving the effectiveness. But in this case since there is no better relationship between the creative and office employees free flow of information is blocked which will ultimately harm the organizational effectiveness. Organizational learning is also blocked in the case of ABC Ad Works. Organizational learning can happen in an organization only when there is a better interpersonal relationship. Better interpersonal relationship is absent in this organization due to the conflict between creative and office staff. And also for external information to enter in the organization new employees are to be hired. This is also not happening in the case of ABC Ad Works. Conclusion It is seen in this case study that the systems method adopted is heuristic in nature and such methodologies are ideal for situation which there is an element of coercion involved. Here the attitude of the owner has created a situation where the employees are unable to communicate with him on issues other than advertisements. The advantage of System of Systems management is that by using the grid, a situation that combines the nature of the system and the complexity of the problem can be obtained and a suitable systems method can be used for solving the problem. The SOSM is flexible in the sense that there is no rigid rule as to which system to follow. The one major limitation is that this system is not ideal for situations that are pluralistic in nature and is too complex to be used in unitary situations. Limitations of this system have given rise to other systems like Total Systems Integration or a meta-methodology. This concept devises a method by which it helps to choose a correct methodology from among the many available, instead of choosing one arbitrarily as in the case of SASM. “The System of Systems Methodology is silent on how such methodologies should be applied, leaving this to the individual methodology.” (Nicholls et al. 2001). Nevertheless Soft Systems approach is still a valuable tool when used in appropriate situations like the case study described here. Since the learning process is absent the company has to find solutions for implementing proper solutions for solving it. The owner should get rid of his dictatorship so that the employees feel free to express their ideas. Bibliography ALLEN, Gemmy (1998). 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Last accessed 14 February 2008 at: http://www.12manage.com/methods_checkland_soft_systems_methodology.html RICH PICTURE OF ABC AD WORKS Angry customers (About delayed work and poor quality) Delayed and bad work Complaints Creative Staff One way communication Complaints Complaints Refers to owner as Hitler, but afraid to talk to him about real issues Front office The owner Communication is related to office work Calls creative people Hole in the Bucket Other office staff (Not really affected) Two way communication regarding office work only (Causing occasional but minor problems) Read More