Introduction to Organization Systems

Organizations vary in size, purpose, and a slew of other variables, and the organization systems they develop and utilize, formally and informally, exhibit similar variety. These perspectives, in turn, have been developed by leveraging diverse but related perspectives and supporting theories as well, further increasing the complexities associated with the topic of organization systems.

A clear and concise discussion regarding several core organization system perspectives is critical to achieve a better understanding of their foundations, their construct and purpose, their applications in real-world scenarios, and the similarities and differences between them. This initial discussion will center on three of these organization system perspectives: rational, natural, and open.

Rational Systems

The rational system perspective represents a performance- or goal-driven approach. “The rational systems perspective of organizational theory that emphasizes the pursuit of specific, focal goals and the rationalization and formalization of structures for attaining these goals” (Chen & Eriksson, 2019). This definition, while concise, may need additional specificity. In particular, the term rationality in this instance requires further clarification.

In the rational systems perspective, rationality refers to “the extent to which a series of actions is organized to lead to predetermined goals with maximum efficiency, Rationality refers not to the selection of goals but to their implementation” (Scott & Davis, 2007). This action-oriented definition centers this perspective and the host organization on purpose, but also leaves tremendous flexibility and agility in the structural design and maintenance. The structural model is shaped by the organization’s needs. “Organizations are instruments designed to attain specified goals. How blunt or fine an instrument they are depends on many factors that are summarized by the concept of rationality of structure” (Scott & Davis, 2007). This is not to imply that the rational systems perspective incorporates “wild west” governance. Administrative controls, i.e., rules, regulations, policies, etc., are essential for the successful application of this system. “Defenders of a rational system view carry the torch of organisations as systematically arranged and rule governed entities” (Strohmaier, 2020).

This arrangement includes clearly defined roles and responsibilities. In a rational system, role assignment drives behavior. “The main expectation from the rational system perspective is that a decision-maker’s (formal) organizational position constitutes the most important explanation of his or her actual decision behaviour” (Egeberg & Stigen, 2018). Elements of this perspective are clearly observed in commercial, and particularly heavy industries (e.g., manufacturing, distribution, construction, etc.) as well as in military and government entities. It is also relevant in charitable organizations, where “‘one sees a broad, seismic shift toward organizational rationalization underway in the nonprofit sector’. Professional management practices and the ability to measure results have become increasingly important in nonprofits’ efforts to secure funding” (Reisman, 2018).

It is important to note that “rational behavior takes place within because of clearly specified limits” (Scott & Davis, 2007). To that end, two critical elements that support a rational system include goal specificity and formalization.

Goal Specificity

Developing and communicating goals throughout an organization can be more daunting than the achievement of said goals. The rational system perspective maintains a primary emphasis on clear, focused goals. “Goals are conceptions of desired ends” and “specific goals provide unambiguous criterion for selecting among alternative activities” (Scott & Davis, 2007). More so, “specific goals also guide decisions about how the organization structure itself is to be designed”, including “what tasks are to be performed and what kinds or personnel are to be hired” (Scott & Davis, 2007).

There are exceptions. “Some organizations espouse vague goals, but in their daily operation are guided by relatively specific goals that do provide criteria for choosing among alternative activities and designing the organization structure” (Scott & Davis, 2007). While the corporate or strategic goals may be unclear, the requirements of and processes for completing tactical-level operations may include supporting goals or targets that do support the overarching mission or vision.

Formalization

In order to support the achievement of specific goals, a rational system requires formalization. The definition of formalization, like many aspects of the rational system perspective, requires specificity. In this case, “the rules governing behavior are precisely and explicitly formulated and to the extent that roles and role relations are prescribed independently of the personal attributes and relations of individuals occupying positions in the structure” (Scott & Davis, 2007). It is “an attempt to make behavior more predictable by standardizing and regulating it” wherein “individual organizational elements are subject to successful and planned modification, enactable by deliberate decision” (Scott & Davis, 2007).

Rational systems require and are defined, in part, by the level of formalization achieved within the organization. Governance, rules, and policies describe expected or required behaviors, and those expected behaviors, in turn, are projected to deliver results (the achievement of goals). The breadth and depth of formalization differs from organization to organization, and are highly dependent on the organization’s historical, current, and potential future needs.

Theoretical Viewpoints

The rational system perspective is built upon several distinct and related approaches including but not limited to Taylor’s Scientific Management, Fayol’s Administrative Theory, Weber’s Theory of Bureaucracy, and Simon’s Theory of Administrative Behavior.

Taylor’s Scientific Management is an icon of management system design and implementation in many industry sectors. It provides organizations with a systemic, logical, and mathematical view of the work environment and can be employed to drive different forms of continuous improvement (e.g., Lean Manufacturing, Six Sigma, etc.). “Taylor was highly pragmatic, concerned primarily with designing methods for the planning of work and working arrangements” (Scott & Davis, 2007).

Fayol’s Administrative Theory is “less pragmatic and more prescriptive” and he “believed that general principles of management could be devised to guide managers as they designed their organizations and busied themselves lists of ‘dos and don’ts’ as guides to decision making” (Scott & Davis, 2007). This checklist approach is popular in manufacturing, food service, and healthcare organizations, and elements of this theory are also applied at the task level in every industry.

Weber’s Theory of Bureaucracy is different, being “less concerned with discovering ways – pragmatic or prescriptive – for improving organizations than with attempting to develop a parsimonious descriptive portrait of the characteristics of the newly emerging bureaucratic structures” (Scott & Davis, 2007). This portrait, and the pursuit thereof, is sophisticated, descriptive, and somewhat nebulous, but does lead to useful business intelligence regarding management structures and roles and their effects across the management system or the entire organization.

Simon’s Theory of Administrative Behavior is “also descriptive, examining the effect of structural features on individual decision makers within the organization” or “how thousands of individual decisions and actions can be integrated in the service of complex goals” (Scott & Davis, 2007). The integration represents the holistic understanding of the organization, or more accurately stated, the system of systems. Each decision-making system drives one or more execution systems that produce results, typically in the form of inputs to another system or other systems.

Personal Perspectives

The rational system is reminiscent of life in the military. Executing the mission was the primary focus, ranks and roles indicated responsibilities, and firm governance detailed (almost) every contingency and expected behavior. This specificity simplifies operations and allows tactical units the flexibility required to get “the job” done.

It can also be observed, quite readily, in heavily automated manufacturing (e.g., automotive, plastics, metals, etc.). The structures and requirements described by the rational system perspective are utilized to unite personnel at all levels and to perpetuate high-volume, and sometimes high-speed production goals.

The strengths associated with this perspective include the call for specific goals, the requirement for formalization, and the overarching emphasis on logic (as evidenced by the foundational concept of Scientific Management). Fans of Gene Roddenberry may refer to this as the most “Vulcan” of the three system perspectives discussed herein. In my experience, the rational system perspective is extremely effective and a foundational need, a corner stone, that many organizations “skip over” in our current environment because it seems to be “too controlling” for the contemporary work force. The opposite is true. The specificity, the formalization, the rules and regulations, they actually reduce uncertainty and the associated risk, and allow all employees to spend more energy on creative, improving ventures rather than constantly draining their resources by continuously developing an ever-changing structure around their activities. It’s a good return on investment.

Natural Systems

The natural system perspective provides a different viewpoint focused on the organization’s culture rather than the achievement specific goals. “Seen from a natural system perspective, informal norms and values play a dominant role in shaping organizational behaviour” (Egeberg & Stigen, 2018). The culture of an organization is a complex concept because it is fed and grown to varying degrees by all members while simultaneously affecting and possibly shaping those same members. The definition of a successful or a productive culture may include positive attention towards the organization itself as well. “A natural system view defines organisations as ‘collectivities whose participants are pursuing multiple interests, both disparate and common, but who recognize the value of perpetuating the organization as an important resource’” (Hansen et al., 2021).

In a natural system, the parts perform their own functions and these functions, in the end, work to better the larger group (typically an organism or an organization), but not in a highly formalized or specific system. “Other characteristics - shared by all social groups – are of greater significance” (Scott & Davis, 2007). These other characteristics include goal complexity and informal structure.

Goal Complexity

The natural system perspective emphasizes a realistic understanding of individuals’ workloads and work systems. “When the stated goals are actually being pursued, they are never the only goals governing participants’ behavior. All organizations must pursue support goals in addition to their output goals” (Scott & Davis, 2007).

The organization and the individuals within must focus on personal, professional, and structural or systemic preventive maintenance and improvement while pursuing and achieving goals for the enterprise. This reality, the fact that individuals are rarely, if ever, focused only on one goal, one outcome, demands exploration and understanding of functions at all levels across the organization. The independence of and interdependencies of targeted outcomes for each member of the organization, from and for a variety of sources, leads to reduced uncertainty and improved efficiencies across all operations. This includes an increased probability of survival. “The major thrust of the natural system view is that organizations are more than instruments for attaining defined goals; they are social groups attempting to survive in their particular circumstances. Preserving the organization becomes an end in itself” (Scott & Davis, 2007).

Informal Structure

The natural system perspective also emphasizes the importance of informal structures. “Formal structures purposefully designed to regulate behavior in the service of specific goals are greatly affected by the emergence of informal structures – those based on the personal characteristics and relations of the specific participants” (Scott & Davis, 2007). This goes beyond corporate decreed rules and regulations and stresses the importance of relationship-driven rules and structure. Informal structures fuel increased communication outside of organization-wide procedural expectations and provide a binding adhesive that may fill in unrealistic or unknown gaps in the formal management structure.

Theoretical Viewpoints

Like the rational system perspective, the natural system perspective is built upon multiple approaches including but not limited to Mayo and Human Relations School, Barnard’s Cooperative System, Selznick’s Institutional Approach, and Parson’s AGIL Schema.

The Human Relations School presents an attempt to humanize the workplace, emphasizing the perceived needs and behaviors of the worker, or “the great variability of individual characteristics and behaviors and have insisted on the relevance of those differences in understanding organizational behavior” (Scott & Davis, 2007). This is directly reflected in the natural system perspective.

Barnard’s Cooperative System “stresses that organizations are essentially cooperative systems, integrating the contributions of their individual participants” and that “participants must be induced to make contributions” (Scott & Davis, 2007). This may include “sticks” or “carrots”, dependent on the situation, and this may be implemented within the formal or informal systems within the organization.

“Parsons recognized the importance of the organization-environment relation” (Scott & Davis, 2007). Under this perspective, the business or organization is “viewed as a subsystem within a more comprehensive societal unit” and the environment is “a stabilizing element sustaining and legitimizing the organization” (Scott & Davis, 2007). This parity, the relationship and interaction between the organization and the environment, presents the prospect to better assess, understand, and positively exploit macro-level (or external) and micro-level (or internal) strengths and opportunities while minimizing the effects of weaknesses and threats.

Personal Perspectives

The focus on informal structures within the natural system perspective makes sense. These subcultural relationships and systems can provide complex support for the organization without significant or concentrated, concerted effort. The natural evolution of these informal structures occurs in practically every human relationship, cannot be avoided (even in a highly controlled organization such as the military), and are human solutions to bridge gaps (and at times, destroy bridges). An attempt to combine the rigid structure of a rational system with the subcultural emphasis of the natural system may provide an improved perspective, better than either of the two perspectives on their own. Care must be exercised, however, not to dictate or design informal structures. Instead, they need to emerge and evolve in support of and along with the organization itself.

Open Systems

Open systems, indicated as step four in Boulding’s Nine System Types, are “capable of self-maintenance based on a throughput of resources from their environment, such as a living cell” (Scott & Davis, 2007). This viewpoint presents a visage of symbiotic dependencies similar to the operation of a simple machine (e.g., a car) and is akin to genetic algorithms and other types of machine learning techniques. The nature of the inclusion of the environment, “the ultimate source of materials, energy, and information, all of which are vital to the continuation of the system”, as an active primary variable is a key differentiator (Scott & Davis, 2007).

This type of system “does not dissect an organization into smaller parts to study individually and then recombine it, hoping for the best result. It encourages one to consider parts as well as interconnection among the parts, as embedded in their external environment” (Jung & Vakharia, 2019). This holistic perspective integrates people, structures, processes, and the environment. The resulting comprehensive system view allows for additional interaction considerations not afforded in the rational or natural system perspectives. The comparison is reminiscent of the differences between One Factor At a Time experimental methods (no account for interactions) and Design of Experiments (deliberate account for interactions) in statistical analysis.

Theoretical Viewpoints

Like the rational system and natural system perspectives, the open system perspective is built upon different approaches including but not limited to Systems Design, Contingency Theory, and Weick’s Model of Organizing.

Systems Design focuses on “determining proper workflows, control systems, information processing, planning mechanisms, knowledge transfer, and their interrelations” (Scott & Davis, 2007). This approach emphasizes understanding key process, communication, and decision-making activities, the associated outputs and customers, and the required inputs and suppliers, and the exchanges or interactions between them. Contingency Theory places additional emphasis on the environment and the requirements it imposes on the organization. “Organizations whose internal features match the demands of their environments will achieve the best adaptation” (Scott & Davis, 2007). Weick’s Model of Organizing stresses that “human beings organize primarily to help them reduce the information uncertainty they face” (Scott & Davis, 2007). This gives credence to the development and evolution of informal structures. This detailed system-level understanding combined with environmental awareness and the importance of informal structures directly supports the open systems perspective.

Personal Perspectives

I have observed several organizations that have successfully demonstrated the traits and characteristics described by the open system perspective. Oddly enough, this is especially true in horizontally integrated groups where the supply chain is self-contained (similar to a closed system) for a majority of the required processing activities.

I have also witnessed the demise of organizations whose leaders failed to grasp the need to include environmental considerations. This typically occurs with businesses that are simplifying or consolidating their offerings but maintaining the previously required sophisticated management structures, an approach that is doomed to fail. “A complex system cannot maintain its complexity in a simple environment” (Scott & Davis, 2007).

This awareness of and successful interaction with the environment is critical, not just for organizations but for individuals, particularly Christians, as well. “How similar is this to people who grow up in religious environments but never become real Christ followers? Proximity doesn’t always lead to salvation” (Merida, 2015). Any individual who seeks Christ must actively delve into understanding the Christian “environment” in a quest to learn more about Him. Awareness of His existence is not enough – we need to understand how the formal and informal structures work, what the rules are, and more. Unfortunately for many, this is just too much effort. As Jesus Christ stated, “Not everyone who says to me, ‘Lord, Lord,’ will enter the kingdom of heaven” (English Standard Version Bible, 2001).

Relationships Between Types of Organization Systems

The rational and natural system perspectives differ for certain. “The rational system perspective stresses the importance of organizational structure over individual interests and capabilities” while “the natural system perspective reverses these priorities” (Scott & Davis, 2007). This is also true for the open system perspective, wherein “the interdependence of the organization and its environment receives primary attention in the open systems perspective…rather than overlooking the environment as most early rational and natural theories” (Scott & Davis, 2007). But they are also complementary in terms of emergence and evolution and overlap between these perspectives abounds. A simplified explanation follows.

The natural system perspective was sired by the perceived deficiencies in the rational system perspective. “The natural system perspective developed in large measure from critical reactions to the inadequacies of the rational system model” (Scott & Davis, 2007). The open system perspective builds on the natural system perspective by including a major thrust for environmental interactions in addition to formal and informal structures.

Conclusion

A system perspective focused analysis or assessment of any organization must be conducted with extreme care and consideration to avoid oversimplification. Systems exist in multiple forms at every level in an organization’s strata, and each individual operates within multiple structures (formal and informal). Definitions provided by each school of thought and individual contributors such as Boulding add some clarity and distinction between the different system perspectives, but there is significant overlap in the theories. In my experience, organizations that exhibit “pure” versions of rational and natural systems tend to struggle. An open system built upon the construct of a rational system that optimizes elements of the natural system perspective may be best.

References

Chen, Q., & Eriksson, T. (2019). The Mediating Role of Decentralization Between Strategy and Performance. Journal of Organizational Change Management, 32(4), 409-425. https://doi.org/10.1108/JOCM-05-2018-0128

Egeberg, M., & Stigen, I. M. (2021). Explaining Government Bureaucrats’ Behaviour: On the Relative Importance of Organizational Position, Demographic Background, and Political Attitudes. Public Policy and Administration, 36(1), 3-18. https://doi.org/10.1177/0952076718814901

English Standard Version Bible. (2001). ESV Online. https://esv.literalword.com/

Jung, Y., & Vakharia, N. (2019). Open Systems Theory for Arts and Cultural Organizations: Linking Structure and Performance. The Journal of Arts Management, Law, and Society, 49(4), 257-273. https://doi.org/10.1080/10632921.2019.1617813

Merida, T. (2015). Christ-centered Exposition Exalting Jesus in 1 & 2 Kings. https://ebookcentral-proquest-com.ezproxy.liberty.edu/lib/liberty/reader.action?docID=4412639#

Øystein Hansen, P., Chroni, S., Åsrum Skille, E., & Abrahamsen, F. E. (2021). Leading and Organising National Teams: Functions of Institutional Leadership. Sports Coaching Review, 10(3), 274-294. https://doi.org/10.1080/21640629.2021.1896213

Reisman, L. M. G. (2018). Managing Amidst Mosaic: Integrating Values and Rationalization in the Nonprofit Arts. Non-Profit Management & Leadership, 28(4), 453-470. https://doi.org/10.1002/nml.21300

Scott, W. R., & Davis, G. F. (2015). Organizations and Organizing. Taylor and Francis. https://doi.org/10.4324/9781315663371

Strohmaier, D. (2020). Organisations as Computing Systems. Journal of Social Ontology, 6(2), 211-236. https://doi.org/10.1515/jso-2020-0052