Chapter 10 Organization Design Chapter 10

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

The Meaning of Organizational Design Organization Design A dynamic process controlling outcomes and process

The Meaning of Organizational Design Management’s Role Redesign: needs change as organization's needs change

The Meaning of Organizational Design Management’s Role

The Meaning of Organizational Design 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

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

Levels of Organization Design Designing a Work Group Clarify Specific purpose of group Time frame for completing problem solving Boundaries of group's authority Appoint a leader

Levels of Organization Design Designing Work Groups Group units to maximize use of: Knowledge and skill Work process Time Commonality of clients or patients Geographic location

Levels of Organization Design Designing a Total Organization Enormous challenge Extensive investment Behavioral flexibility

Levels of Organization Design Designing a Network Coordination of services and client flow Analyze interorganizational relationships Decide which organizations should have most power Identify resource transactions Diffusing innovations

Levels of Organization Design 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 Differentiation The requirement to divide work into specialized parts or functions Integration The requirement to coordinate the work across different operating units or functions All organizations must do both Chapter 10

Designs for a Variety of Health Services Organizations The Continuum of Organizational Design

Designs for a Variety of Health Services Organizations Functional Design Specialized labor divided into departments Most useful when organization has few products or goals

Designs for a Variety of Health Services Organizations Functional Design Enables decision making on a centralized, hierarchical basis Unsuitable when: Organization grows Organization diversifies Poor departmental coordination allows top heavy decision making

Designs for a Variety of Health Services Organizations Functional Design

Designs for a Variety of Health Services Organizations Divisional Design Organizational divisions and semiautonomous units Decentralizes decisions to lowest level Difficulties arise when priorities are determined at higher organizational levels

Designs for a Variety of Health Services Organizations Divisional Design

Designs for a Variety of Health Services Organizations Matrix Design Improves coordination and communication across organization Characterized by dual authority system Reporting to managers Disadvantages due to dual authority system Disadvantages stem from the dual authority lines Example: conflicting expectations and ambiguity. Chapter 10

Designs for a Variety of Health Services Organizations Matrix Design

Designs for a Variety of Health Services Organizations 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

Designs for a Variety of Health Services Organizations Parallel Design Advantages Increased performance and quality Disadvantages Time in meetings Increased cost of operations Conflicts between two structures

Designs for a Variety of Health Services Organizations Parallel Design

Designs for a Variety of Health Services Organizations Product/Service Line or Program Design One person in charge of product or group Advantages: Increased operational efficiencies Enhanced market share

Designs for a Variety of Health Services Organizations 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

Designs for a Variety of Health Services Organizations 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

Designs for a Variety of Health Services Organizations Product/Service Line or Program Design Key Factors for Success Strong support staff Align authority and responsibility Integrative mechanisms across product lines A strong support staff, particularly in the areas of marketing, finance, and planning The need to align authority and responsibility The need for integrative mechanisms that cut across product lines; hence, the development of the steering committee The need for a concerted management development program that emphasizes the ability to work with more than one manager, communication skills, conflict management skills, computer literacy, and creativity Chapter 10

Designs for a Variety of Health Services Organizations 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 A strong support staff, particularly in the areas of marketing, finance, and planning The need to align authority and responsibility The need for integrative mechanisms that cut across product lines; hence, the development of the steering committee The need for a concerted management development program that emphasizes the ability to work with more than one manager, communication skills, conflict management skills, computer literacy, and creativity Chapter 10

Designs for a Variety of Health Services Organizations Product/Service Line

Influences on Future Organization Designs The Mission Specificity is important to determine design

Influences on Future Organization Designs The Future Environment Changing demographic characteristics Public and consumer sophistication Range of services provided outside traditional hospitals Increasing range of services being provided outside of traditional hospitals Ambulatory care programs, home care, long-term care, community health centers, etc. Growing involvement with the community to address underlying health issues Teenage pregnancy, substance abuse, and violence Chapter 10

Influences on Future Organization Designs The Future Environment Involvement in community to address underlying health issues Increasing competition Increasing regulatory pressures Increasing range of services being provided outside of traditional hospitals Ambulatory care programs, home care, long-term care, community health centers, etc. Growing involvement with the community to address underlying health issues Teenage pregnancy, substance abuse, and violence Chapter 10

Influences on Future Organization Designs 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

Influences on Future Organization Designs 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

Influences on Future Organization Designs The Organization Greater emphasis on teamwork Social contract accountability for governance Corporatization of health services organizations Demands to improve the quality of care

Influences on Future Organization Designs The Organization Demands to control costs, efficiency, productivity, and value Comprehensive and integrated clinical and financial information systems Constrained financial resources

Influences on Future Organization Designs The Organization Changing working relationships Increasing use of information technology Increasing need to coordinate activities internally The Organization, cont’d Changing working relationships Two or more supervisor systems Increasing use of information technology in the workplace Increasing need to coordinate activities internally and to manage conflict creatively Increasing recognition of the need for inter-organizational collaboration among public and private organizations to more effectively deal with preventable diseases Examples: SARS, influenza and AIDS. Chapter 10

Influences on Future Organization Designs The Organization Managing conflict creatively Collaboration among public and private organizations to address preventable diseases The Organization, cont’d Changing working relationships Two or more supervisor systems Increasing use of information technology in the workplace Increasing need to coordinate activities internally and to manage conflict creatively Increasing recognition of the need for inter-organizational collaboration among public and private organizations to more effectively deal with preventable diseases Examples: SARS, influenza and AIDS. Chapter 10

Influences on Future Organization Designs Culture Focus on "customer" and patient-centered care Patient satisfaction surveys to modify care Broad sets of performance indicators Community-based care

Influences on Future Organization Designs 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

Influences on Future Organization Designs Culture Value of nonhierarchical leaders who can lead change processes Emphasis on teamwork and collaboration with nontraditional partners

Influences on Future Organization Designs Culture Integrating functions and clinical processes Trust development Creating a culture of patient safety Promoting ethical work practices Increasing importance of physicians and other health professions to collaborate in developing trust in health services organizations Chapter 10

Influences on Future Organization Designs Human Resources Acute shortage of nursing personnel Emphasis on cross-training vs. traditional professional training

Influences on Future Organization Designs Human Resources Emphasis on horizontal teams and collaborative practices Pressure to substitute "cheaper" health care workers for more expensive health professionals

Influences on Future Organization Designs 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 Greater numbers of women in managerial positions requiring flexibility such as accessibility of day care and job sharing Greater ethnic and cultural diversity of the workforce Greater need to experiment with new work arrangements Self-managed work teams CQI/TQM strategies Many physicians who historically have had considerable autonomy becoming employees Shortages of key health services professionals Examples: pharmacists, physical therapists, occupational therapists Chapter 10

Influences on Future Organization Designs Human Resources Physicians becoming employees Shortages of key health services professionals Increasing need for managers with professional training Greater numbers of women in managerial positions requiring flexibility such as accessibility of day care and job sharing Greater ethnic and cultural diversity of the workforce Greater need to experiment with new work arrangements Self-managed work teams CQI/TQM strategies Many physicians who historically have had considerable autonomy becoming employees Shortages of key health services professionals Examples: pharmacists, physical therapists, occupational therapists Chapter 10

Influences on Future Organization Designs 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

Influences on Future Organization Designs Human Resources Succession planning, career planning, and management development Pressure to provide continuing education, especially for clinical managers

Influences on Future Organization Designs The Political Process Informal leaders may be helpful Better management to identify key players in redesign process Informal leaders may be especially helpful Identifying how a change in organization design might be received Communicating ideas about change to the grass-roots level in the organization Repressing incorrect rumors that could damage the implementation process Chapter 10

Organization in Transition Life Cycles Four phases (Starkweather and Kisch): Search Success Bureaucratic Succession Four phases through which health services organizations pass (Starkweather and Kisch): Search phase Characterized by newness, innovation, and a sense of ascendancy An organization in this phase is typically open and informal. Success phase Characterized by achievement in procuring patients, staff, and financial resources An organization becomes more formalized due to a larger scale of operation. Bureaucratic phase Characterized by a relatively rigid conformity to rules and procedures An organization is isolated from its clients and may begin to decline because of its inability to respond to environmental changes. Succession phase Characterized by the development of new ways of providing services, often through the development of new units within the organization. Chapter 10

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 Quality of care has become an increasingly important differentiator of health services organizations Quality is an organizational problem Variation in quality is as much due to the way in which care is organized and coordinated as it is to the competence of individual care givers. To improve quality, new organization designs need to emphasize the importance of organizing work around the patient and reframing the role of the hospital in the context of a system of health services provided in multiple settings Chapter 10