William
F. Roth PhD
The concept that needs to
be introduced at this point is “systemic thinking,” a concept very much in
vogue twenty-five years ago that eventually fell out of favor, overshadowed,
unfortunately, by more quantitative approaches. The systemic approach to
management is built on two pillars. The first is the belief that “a whole is
more than the sum of its parts.” This means, basically that the interactions
between the parts of an organization are just as important as the parts
themselves in terms of the organization meeting its objectives.
The second pillar of the
systemic approach is the “Development Ethic.” It says that employees should be
encouraged to develop and utilize their positive potential to the fullest
possible extent in order to improve their quality of work life and of life in
general and to improve the fortunes of the company.
Organizations that have
become “systemic” in nature possess four key characteristics. First, they are
truly participative in the sense that every employee affected by a decision is
allowed some level of input into that decision. Second, organization activities
are integrated on all levels and between all levels. Third, organizational
activities facilitate the on-going learning of all employees. Fourth, the
organization is capable of dealing with continual change in both the external
and internal environments, change that is occurring with increasing rapidity.
How do we design an
organization that has these characteristics, shaping the involved organization
processes in such a way that they support the highest possible level of
productivity? First, turn support functions into profit centers. They sell their
service to production units. This is a bad idea, right? Without competition
they would be free to overcharge. But what if production units were free to buy
the involved service from an outside supplier if that supplier was cheaper? Input Units would then be forced to compete. Also,
under this arrangement, because they were now profit centers, Input Units could
sell their services to other companies so long as no conflict of interest
existed, thus improving corporate profits.
Second, reshape the reward
system so that it encourages all the desired systemic organizational
characteristics. The “Three-Tiered Reward System” fits well with this model.
All employees receive salaries that will constitute the smallest part of their
reward during good times and will allow employees and families to survive
during bad times. All Output and Input Unit employees receive a share of a
percentage of their unit’s profits.
Finally, all employees will receive a company-wide bonus, one normally
comprising the largest part of their reward in order to keep employees from
focusing on the productivity of their individual units rather than on the
productivity of the organization as a whole, in order to encourage
organization-wide cooperation and integration.
In this model, upper level salaries will be supported by a tax levied on
each unit’s profits. Members of upper level management will be eligible to
share in the company-wide bonus which will also be drawn from the unit tax
revenues.
Third, decision making
will be turned over to a hierarchy of “boards.” Each manager, starting at
lowest level will have a “board of directors” on which he or she sits. Other
members of each board include the manager’s direct reports, be they low level
workers or other managers, and the boss of the manager whose board it is. The
direct reports, if they are also managers, of course have their own boards and
bring along input from their direct reports who also have boards. The
boss, as well, has his or her own board on which the boss’ boss sits, bringing
along input from his or her boss who sits on his or her board. As a result, any
manager above the lowest level receives input, direct or indirect, from three
levels below and three levels above.
Boards can also invite representatives from other units who might make a
contribution to take part in meetings. Obviously, this approach encourages both
participation and the integration of efforts.
Each board’s
responsibilities will include:
- Planning for the unit whose board it is.
- Policy making for the unit whose board it is
- Coordinating the plans and policies of the immediate lower level.
- Integrating the board’s plans and policies with those of lower level and higher-level units.
- Improving the quality of work life of those the level board governs.
- Evaluate on an on-going basis the performance of the manager whose board it is.
What these level boards
do, of course, is take over the major responsibilities of management. The
manager whose board it is becomes mainly a facilitator, making sure that the board’s
efforts remain focused on the organization’s long-term objectives, facilitating
and helping integrate the efforts of his or her board with those of other
boards.
