1. Chapter 10
Organization Design
Chapter 10

2. Purpose and Overview Purpose
To explore how decisions are made about designing organizational structures

3. 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

4. The Meaning of Organizational Design
Building blocks of organization are arranged to improve effectiveness and adaptive capacity
Authority
Responsibility
Accountability
Information
Rewards

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

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

7. The Meaning of Organizational Design
Management’s Role

8. 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

9. Levels of Organization Design

10. 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

11. 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

12. 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

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

14. 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

15. Levels of Organization Design
Designing a Health System
Centralization vs. decentralization
Setting policy
Initiating activities
Granting final approval

16. Systematic Assessment Before Design

17. 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
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18. Designs for a Variety of Health Services Organizations
The Continuum of Organizational Design

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

20. 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

21. Designs for a Variety of Health Services Organizations
Functional Design

22. 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

23. Designs for a Variety of Health Services Organizations
Divisional Design

24. 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.
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25. Designs for a Variety of Health Services Organizations
Matrix Design

26. 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

27. 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

28. Designs for a Variety of Health Services Organizations
Parallel Design

29. 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

30. 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

31. 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

32. 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
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33. 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
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34. Designs for a Variety of Health Services Organizations
Product/Service Line

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

36. 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
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37. 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
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38. 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

39. 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

40. 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

41. 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

42. 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.
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43. 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.
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44. 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

45. 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

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

47. 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
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48. Influences on Future Organization Designs
Human Resources
Acute shortage of nursing personnel
Emphasis on cross-training vs. traditional professional training

49. 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

50. 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
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51. 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
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52. 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

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

54. 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
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55. 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.
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56. 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
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