Process approach: The performance of planning, leading, and controlling activities, seen as circular and continuous.
In December 1961, Harold Koontz published an article in which he carefully detailed the diversity of approaches to the study of management functions, quantitative emphasis, human relations approaches and concluded that there existed a “management theory jungle’. Koontz conceded that each of the diverse approaches had something to offer management theory, but he then proceeded to demonstrate that many were only managerial tools. He felt that a process approach could encompass and synthesize the diversity of the day. The process approach originally, introduced by Henri Fayol is based on the management activities discussed. The performance of these activities – planning, organizing, leading and controlling – is seen as circular and continuous.
Although Koontz’s article stimulated considerable debate, most management teachers and practitioners held fast to their own individual perspectives. But Koontz had made a mark. The fact that most current management textbooks employ the process approach is evidence that it continues to be a viable integrating framework.
How can a systems approach integrate management concepts?
The mid 1960s began a decade in which the idea that organizations could be analyzed in a systems framework gained a strong following. The systems approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Societies are systems and so, too are computers, automobiles, organizations and animal and human bodies.
The two basic types of systems are closed and open. Closed systems are not influenced by and do not interact with their environment. In contrast, an open systems approach recognizes the dynamic interaction of the system with its environment. Today, when we talk of organizations as systems we mean open systems. That is, we acknowledge the organization’s constant interaction with its environment which can result in negative synergy.
An organization (and it management) is a system that interacts with and depends on its environment. In management terms, we call this relationship dealing with the organization’s stakeholders. Stakeholders are any group that is affected by organizational decisions and policies, including government agencies, labor unions, competing organizations, employees, suppliers, customers and clients, local community leaders, or public interest groups. The manager’s job is to coordinate al these parts to achieve the organization’s goals. Most organizational members realize that customers are the lifelines of organizations, and bringing a new product to market without first ensuring that it is needed, and desired, by customers could lead to disaster. If failing to anticipate what customers want leads to a reduction in revenues fewer resources are likely to be available to pay wages and taxes, buy new equipment or repay loans. The systems approach recognizes that such relationships exist and that management must understand them and the potential constraints that they may impose. This same relationship is also true regarding management ethics. The questionable actions of executives at such companies as Enron, Arthur Anderson, WorldCom, ImClone, and Adelphia lead to new laws and regulations regarding accounting practices. Furthermore, these actions also generated a renewed concern by the public for ethical practices in contemporary organizations.
The systems approach also recognizes that organizations do not operate in isolation. Organizational survival often depends on successful interactions with the external environment, which encompasses economic conditions, the global marketplace, political activities, technological advancements, and social customs. Ignoring any of these over a long period of time has a detrimental effect on the organization.
Just how relevant is the systems approach for a manager? It appears to be quite relevant, particularly because a manager’s job entails coordinating and integrating various work activities so that the system of interrelated and interdependent parts (the organization), meets its goal. Although the systems perspective does not provide specific descriptions of what managers do, it does provide a broader picture than the process approach does. Moreover, viewing the manager’s job as linking the organization to its environment makes the organization more sensitive and responsive to key stakeholders such as customers, suppliers, government agencies and the community in which it operates.