Management from the perspective of systems theory Peter Andras and Bruce G Charlton University of Newcastle

Overview Management theories Abstract communication systems Management systems Discussion Conclusions

Management theories

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

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

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

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 ?

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

Abstract communication systems

Communications Sender Signal Receiver Referenced communications

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

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

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

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

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

Limits of expansion Length of non-random sequences of referencing Longer sequences – better description/prediction of the environment p1 p2p3 p4 p1’ p2’ p3’p4’

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

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

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)

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

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

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

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

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

Management systems

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

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

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

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

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

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)

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

Discussion

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

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

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

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

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

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

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

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

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

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)

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