chapter 10 organization design. copyright © 2006 by thomson delmar learning. all rights reserved. 2...

Chapter 10 Organization Design

Purpose and Overview

• Purpose– To explore how decisions are made about

designing organizational structures

Purpose and Overview

• Overview– The Meaning of Organizational Design – Levels of Organization Design – Systematic Assessment Before Design – Designs for a Variety of Health Services

Organizations – Influences on Future Organization Designs – Organization in Transition

The Meaning of Organizational Design

• Building blocks of organization are arranged to improve effectiveness and adaptive capacity

– Authority

– Responsibility

– Accountability

– Information

– Rewards

• Organization Design– A dynamic process controlling outcomes and

process

• Management’s Role – Redesign: needs change as organization's

needs change

• Management’s Role

• When a design should be reconsidered – Severe performance problems– Change in environment that affects internal

policies– New programs or product lines – Leadership change

Levels of Organization Design

• Designing a Position– Identify:

• Major responsibilities and roles• Skills and training necessary• To whom the person and work are

accountable• The relationship of other peer positions

• Designing a Work Group– Clarify

• Specific purpose of group• Time frame for completing problem solving• Boundaries of group's authority

– Appoint a leader

• Designing Work Groups– Group units to maximize use of:

• Knowledge and skill• Work process• Time• Commonality of clients or patients• Geographic location

• Designing a Total Organization– Enormous challenge– Extensive investment– Behavioral flexibility

• Designing a Network– Coordination of services and client flow– Analyze interorganizational relationships

• Decide which organizations should have most power

• Identify resource transactions • Diffusing innovations

• Designing a Health System– Centralization vs. decentralization

• Setting policy• Initiating activities• Granting final approval

Systematic Assessment Before Design

Designs for a Variety of Health Services Organizations

• Differentiation

• Integration

• All organizations must do both

• The Continuum of Organizational Design

• Functional Design– Specialized labor divided into departments – Most useful when organization has few

products or goals

• Functional Design– Enables decision making on a centralized,

hierarchical basis– Unsuitable when:

• Organization grows• Organization diversifies • Poor departmental coordination allows top

heavy decision making

• Functional Design

• Divisional Design– Organizational divisions and semiautonomous

units – Decentralizes decisions to lowest level– Difficulties arise when priorities are

determined at higher organizational levels

• Divisional Design

• Matrix Design– Improves coordination and communication

across organization– Characterized by dual authority system– Reporting to managers– Disadvantages due to dual authority system

• Matrix Design

• Parallel Design– Bureaucratic or functional organization

• Responsible for routine activities– Parallel side

• Responsible for complex problem solving requiring participatory mechanisms

– Commonly seen with CQI/TQM

• Parallel Design– Advantages

• Increased performance and quality– Disadvantages

• Time in meetings• Increased cost of operations• Conflicts between two structures

• Parallel Design

• Product/Service Line or Program Design– One person in charge of product or group– Advantages:

• Increased operational efficiencies• Enhanced market share

• Product/Service Line or Program Design Key Factors for Success– Management system linking clinical, financial,

and volume data by product– Financial system that disaggregates costs

and revenues to assign accountability

• Product/Service Line or Program Design Key Factors for Success– Innovation and risk taking rewards– Health care provider involvement in:

• Technology• Diagnosis and treatment • Quality improvement• Patient-centered issues

• Product/Service Line or Program Design Key Factors for Success– Strong support staff– Align authority and responsibility – Integrative mechanisms across product lines

• Product/Service Line or Program Design Key Factors for Success– Comprehensive management development– Ability to work with more than one manager– Communication skills– Conflict management skills– Computer literacy– Creativity

• Product/Service Line

Influences on Future Organization Designs

• The Mission– Specificity is important to determine design

• The Future Environment– Changing demographic characteristics– Public and consumer sophistication– Range of services provided outside

traditional hospitals

• The Future Environment– Involvement in community to address

underlying health issues– Increasing competition– Increasing regulatory pressures

• The Future Environment– Changing reimbursement systems – Expanding private sector involvement– Involvement of trustees, physicians, and other

health professionals in strategic planning– External standards for professional conduct

• The Future Environment– Demand for accountability and value– Focus on patient safety and quality of care– Rapidly developing medical technologies– Information demands– Development of information systems– Artificial intelligence

• The Organization– Greater emphasis on teamwork– Social contract accountability for governance– Corporatization of health services

organizations– Demands to improve the quality of care

• The Organization– Demands to control costs, efficiency,

productivity, and value– Comprehensive and integrated clinical and

financial information systems– Constrained financial resources

• The Organization– Changing working relationships – Increasing use of information technology– Increasing need to coordinate activities

internally

• The Organization– Managing conflict creatively– Collaboration among public and private

organizations to address preventable diseases

• Culture– Focus on "customer" and patient-centered care– Patient satisfaction surveys to modify care – Broad sets of performance indicators– Community-based care

• Culture– Use of evidence and health outcome measures– Challenges to traditional ways of operations – Value of employees committed to organization– Value of employees who are adaptable

• Culture– Value of nonhierarchical leaders who can lead

change processes– Emphasis on teamwork and collaboration with

nontraditional partners

• Culture– Integrating functions and clinical processes– Trust development– Creating a culture of patient safety– Promoting ethical work practices

• Human Resources– Acute shortage of nursing personnel– Emphasis on cross-training vs. traditional

professional training

• Human Resources– Emphasis on horizontal teams and

collaborative practices – Pressure to substitute "cheaper" health care

workers for more expensive health professionals

• Human Resources – More women in management require flexibility

• Accessibility of day care and job sharing– Greater ethnic and cultural diversity of

workforce– Need to experiment with new work

arrangements

• Human Resources – Physicians becoming employees– Shortages of key health services

professionals– Increasing need for managers with

professional training

• Human Resources– Increasing unionization of workers – Closer scrutiny by unions as some organizations

retrench– Need to educate all employees in strategic

management – Adopting a marketing orientation

• Human Resources– Succession planning, career planning, and

management development – Pressure to provide continuing education,

especially for clinical managers

• The Political Process– Informal leaders may be helpful – Better management to identify key players in

redesign process

Organization in Transition

• Life Cycles– Four phases (Starkweather and Kisch):

• Search • Success • Bureaucratic • Succession

Organization in Transition

• Designs for Quality Improvement– Quality of care – Quality is an organizational problem– Emphasize:

• Organizing work around patient • Reframing role of hospital in health

services system

chapter 10 organization design. copyright © 2006 by thomson delmar learning. all rights reserved. 2...

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