4 essential Significance of System Approach in an organisations:
1. The system approach is characterized by elements of both the organic and the mathematical theories. It is based on the idea that all organisms, including human organization, are systems that probably follow the same rules to some extent.
Therefore an organization should be studied not merely as a formal arrangement of superiors and subordinates or as a social system in which people influence each other, but as a total system in which the environment, the formal arrangements the system, and the technical systems are all constantly interacting.
2. In this view, the organization is not a static arrangement of jobs that can be captured in an organization charts, but a pattern of “inputs, outputs, feedback, and flows” (of information, physical objects, or both). If such a system is to survive, it can do so only if external or internal changes-it settles down into a “steady state” in which inputs outputs and flows are processing in an orderly way.
3. The fact that an organization reaches a steady state does not mean that it must remain static and neither grows nor improves its situation. It may do both; to say that it is in a “steady state” means merely that it is functioning in an orderly way.
If, for example external or internal disturbances block inputs in the form of revenue from sales, or output is blocked to the point where nothing is produced, it will surely die unless it returns to a steady state within a reasonable, length of time.
4. It can be seen that determining the effect of any particular decision or environmental change on the total organization would be a very complicated procedure, requiring the use of higher mathematics and a computer. Moreover, to assign mathematical values to each of the many variables is at present impossible.
The systems approach based on mathematical analysis, econometrics, operations research and other scientific methods views organizing as a system of mutually dependent variables. It is like human systems which contain a large number of dependent variables.
In the systems approach on decision making, the parts of the system which are important are (i) The individual (ii) the formal structure (iii) the informal organization (iv) status and role patterns, and (v) physical work environment.
These parts are woven into a form called organizational system. There are three linking activities namely communication, balance and decision making universal for interpersonal relationships. The theory attempts to include total organizational perspectives.