Understand why Management systems are so crucial for business success

I already posted more than once about the importance of management systems (www.pngalaxies.com/blog) to the success of businesses in todays and the future complex business world. In this post, I’ll explain why management systems are so crucial.

An organization is a group of people with a particulate purpose. A closer look into organizations reveals that organizations are a set of elements that interact one with each other to group people and define a purpose. Management system, organization structure, people and culture are the main elements that interact, impact and construct any organization.

Management System: is a set of policies, processes, and procedures used by an organization to ensure that it can fulfill the tasks required to achieve its objectives. Many types of management systems are spreading on a large scale from command and control to decentralization and self-management.

Organization Structure: To operate effectively and efficiently, a company needs a formal system of communication, decision-making, and task-completion that matches the needs of the organization. The Organization structure is always reflecting the chosen management system. Usually, hierarchies structures are a natural fit for command and control management systems, while flat structures are associated with more decentralized management systems.

People: The third element, and the most complex one, are the people that part of the organizations. Organizations will do their best to add people that are a fit and want to work following the management system and the chosen organization structure.

Culture: The last and most abstract element is the organization culture. Organizational culture is a system of shared assumptions, values, and beliefs, which governs how people behave in organizations. These shared values have a strong influence on the people in the organization and dictate how they dress, act, and perform their jobs (https://study.com/academy/lesson/what-is-organizational-culture-definition-characteristics.html).

Culture is a shadow defined by organization management system and structure. Although culture has a significant impact on people, it is also the outcome of people. There are bidirectional relationships between people and culture. Keep in mind that the management system and organization structure influence which type of people the organization has.

While reading these definitions, it is easy to see the influence of the management system on all other aspects of the organization. Although each element impacts another element, the management system will drive a structure that will accept and keep people that are a fit for the underlying assumptions of the management system. Any person that will show any level of deviation from the norms imposed by the management system will be eventually filtered out of the organization. If you spend five minutes, you can come with at least five people that can prove my last point. Screening the right people for an organization also has a direct impact on the organization culture. So, in a nutshell, I hope that you can see the significant effect of management system on organizations.

On top of internal elements, there is also an external element that has a significant impact on any organization, The environment (or the business environment). None of the existing organizations are working in a vacuum. Any organization is a part of an industry with competitors, customers, vendors as well as governments and citizens of countries where the organization operate. Sometime organizations will be part of more than one industry or country. One way or another, all the elements of the industries organization is a part of are the organization environment.

The organization environment has a crucial role and influence on any organization success. The environment creates continuous stress and pressure on the organization. Any organization needs to find ways to deal with the environmental impact.

Failing to deal with the outside pressure has a catastrophic implication on any company. Due to the influence of management system on structure, people and culture; the chosen management system have a significant impact on the ability of an organization to respond to the environment and to be successful.

People have difficulty to relate cause to results, especially as the time between the cause and the effect is longer and there are more element between the cause and the impact.

Diagram 1

Diagram 1 depicts the management system impact on the structure. Structure impact on people, people impact on culture and culture impact on how organizations operate. The environment, on the other hand, always provide triggers enforcing the organization to act.

Therefore, when there is a change in the environment and the organization fails to operate the first complaint will be associated with the organization culture, then people. In infrequent scenarios, the finger will point the structure and in rare situations (it at all) to the management system.

The paradox is that management structure is the cause of the failure, but there is a considerable time of delay between setting management system and a failure. On top of the time delay and due to other elements that exist between the management system and failing to operate, those elements seen as the cause of the failure. Therefore the first attempt will be a focus on addressing them. The result is continuous attempts to fix culture, replace people and never-ending organization restructuring that never manage to correct the problem.

To make it even more tricky; in the beginning, the management system will be a fit for the organization environment. The initial fit will install a mental model that the management system is a fit for the environment. In reality management system is a fit for an environment in a single point of time, but need to adjust all the time to reflect the current environmental impact.

If you are seeking your organization success, don’t blame culture, people or structure. Drill down to the management system and make sure it is still applicable to address your organization environment. This painful process is the only one available to find and fix causes and prepare your organization for a better future.

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