Management of Health Care Organizations

Chapter 6: Structuring for Improvement

Objectives

• Understand the need to differentiate work roles and tasks and different ways to achieve this goal.

• Appreciate the need to integrate work roles and tasks.

• Be familiar with structural contingency theory. • Be able to discuss different types of structures

(simple, machine bureaucracy, professional bureaucracy, organic, and mechanistic).

• Understand structuring options that promote organizational improvement.

Outline

• Dimensions of Organizational Structure

• Balancing Differentiation and Integration

• Structural Contingency Theory

• Types of Structures

• Structuring for Improvement and Value

Dimensions of Organizational Structure

• Two dimensions of structure:

– Differentiation: the degree to which tasks and workers are separated into different subunits.

– Integration: the degree to which seamless coordination is achieved among subunits of a system.

• Managers balance the need to split activities into separate components and put them back in the form of an integrated product.

Value of Differentiation

• Differentiation allows organizations to benefit from specialization. – This occurs when workers develop extensive

knowledge and experience around one particular task or activity.

• Organizations make long-term decisions about differentiation that are reflected in job descriptions and the groupings of tasks and workers on an organization chart. – These decisions form the skeleton of an

organization or unit.

Ways to Differentiate

• Employees are typically assigned to units based on the skill or knowledge that they bring to the work setting.

• Example: If a clinic adds staff to handle scheduling, billing, or custodial, the level of differentiation increases.

• In a highly differentiated group or unit, workers’ tasks are specialized. One may clean rooms while another stocks supplies. One may greet and prepare customers for various services.

Who Must Worry About Integration?

• Units that are highly differentiated need to pay attention to integration so all parts work toward a joint goal.

• In small organizations that use routine and stable technology, integration may not be a big issue.

• Example: the delivery of clinic services in a community health setting calls for integrating the activities of multiple clinical and clerical staff.

Ways to Integrate

• Aggregate all workers producing a particular product, program, or service. – Health care delivery facilities are often structured

around service lines such as Oncology.

– Product grouping satisfies a need to integrate departments around a single product or service.

• Divisional groupings based on client categories or geographic area. – Helps organizations be more responsive to

particular groups of consumers.

Balance Differentiation and Integration

• Managers balance differentiation with integration when structuring organizations.

• Structuring tools include

– Hierarchy

– Standardization and Formalization

– Centralization

– Coordinating mechanisms

Defining Hierarchy

• Hierarchy, or formal authority, divides responsibility (differentiate) and integrates work by holding employees accountable to higher authorities.

• Hierarchy is illustrated by vertical relationships in an organizational chart.

• Employees on lower levels are accountable to managers on higher levels.

• Everyone knows who their manager is, and everyone has one and only one supervisor.

Flat Versus Tall Hierarchies

• Flat: Few levels

– Allow for quick movement of information and approval.

• Tall: Many levels

– Information transfer is slower and formal approval requires more time.

Span of Control and Matrix Structure

• Span of control: The number of workers reporting to a single manager. – In a flat hierarchy, managers have larger spans of control. – Tall hierarchies usually have smaller spans of control.

• Matrix structure: Employees report to two or more supervisors. – For example, workers may report to a departmental

supervisor as well as a supervisor of a service line. – Matrix structures are flexible. However, employee

evaluations often create conflict. Which supervisor completes the evaluation?

Standardization

• Standardization: degree of uniformity in inputs, work processes, and outputs.

• Examples:

– Inputs: All workers receive the same training.

– Processes: Standardized by guidelines, rules, and policies.

– Outputs: Dimensions of the output are specified and defined.

Formalization

• Formalization: degree to which organizational policies and norms are codified.

• Formalized units have many documented procedures and policies.

• Documentation and record-keeping are among the important responsibilities of management.

Centralization

• Centralization: degree to which decisions and information flow are controlled by a single individual or unit.

• Organizations integrate procedures by centralizing decision-making activities and information flow.

• Decisions of a strategic nature are often centralized at the top of the hierarchy of an organization.

Liaisons, Committees, and Task Forces

• Coordinate activities through committees or task forces.

• Cross-functional committees are a common way to exchange information involving different departments or functional areas.

• Units of organizations may appoint liaison personnel to relate to other interdependent groups or departments.

Structural Contingency Theory

• Structural Contingency Theory: The art and science of structuring by making decisions about structure within larger contexts.

• Context includes these six variables: – Strategy

– Culture

– Technology

– Size

– Life Cycle

– Environment

Six Variables of Structural Contingency Theory

• Strategy: Structure should match the unit’s strategy. • Culture: Structure should match the underlying norms

and values. • Technology: Type of technology is a determinant of

structure. • Size: Larger size typically results in the need for greater

formalization and integration. • Life Cycle: As organizations mature, they tend to

become increasingly inflexible. • Environment: Environment is uncertain, defined as the

complexity and dynamism of its elements.

Types of Structures

• Structuring decisions tend to cluster because dimensions of structure are interdependent.

• A few key concepts that usefully characterize types of organizational structures have emerged: – Simple Structures

– Bureaucracies: Machine and Professional

– Virtual, Network, and Self-organized Structures

– Mechanistic vs. Organic Structures

Simple Structures

• Simple structures: Have few levels of hierarchy (flat), wide spans of control, and low levels of differentiation and formalization.

• Usually has one person in charge.

• Issues of integration are relatively simple to resolve.

• Decisions are made quickly.

• A small proportion of public health employees work in organizations that have simple structures.

Bureaucracies

• Characterized by clear and stable differentiation, steep hierarchies, centralized control, extensive rules, and standardized procedures governing performance.

• Consistency, equity, and uniformity encompass bureaucracies

• Criticisms include being slow in responding to need for change, tend to be rigid, self-perpetuating, and insulated from external pressures.

• Further, bureaucracies can be alienating to workers, customers, and clients, particularly those who are atypical.

Machine Bureaucracies

• Machine: High degree of centralization and extensive reliance on formal channels for communication.

– The name reflects the fact that decisions tend to be made by senior managers and mechanically implemented by workers at lower levels.

Professional Bureaucracies

• Professional: Highly decentralized and presence of a high proportion of professional workers means that centralized control is ineffective.

– To have influence, managers must become facilitators, coordinators, and supporters rather than directors of professionals.

Virtual, Network, and Self-organized Structures

• Virtual teams, units, and organizations link together their parts through distance communication, typically using the Internet.

• Networks typically have few or no levels of hierarchy and are often linked for specific purposes and time periods.

• Self-organized teams are given an assignment, often with a deadline, resources with which to operate, and the autonomy to chart their path to complete the assignment.

Mechanistic vs. Organic Structures

• Mechanistic structures exhibit low differentiation, centralized decision-making, and high standardization and formalization. – This assures efficiency and consistency in

production.

• Organic structures exhibit high differentiation, decentralized decision-making, and low standardization and formalization. – Integration occurs through the use of mutual

adjustment rather than centralization.

Structuring for Improvement and Value

• Structuring decisions are highly leveraged because their impacts are widespread and long-lasting.

• Suggestions include:

– Encourage mutual adjustment

– Experiment with client-centered structures

– Push for more organic structures

– Use informal hierarchies and social networks

Encourage Mutual Adjustment

• Mutual adjustment achieves coordination through continuous feedback among units.

• Each unit adjusts its activities based on information about the activities of other units.

• Units can share information about their activities, and understand the challenges of others.

• Transparency and sharing are important.

• Mutual trust is critical.

Experiment with Client-centered Structures

• Design structures on the basis of programs, services, or product lines rather than on professional specialty or traditional departments.

• Involve consumers in the strategic planning and oversight of the organization.

Push for More Organic Structures

• Theorists have argued that organic and self- organizing structures are more appropriate for dynamic and uncertain environments.

• Some structure is valuable even in entrepreneurial start-up companies.

• Mature organizations may benefit from introducing more organic structures and experimenting with self-organization.

Use Informal Hierarchies and Social Networks

• A formal hierarchy of authority is often not followed, particularly if it is steep and slow to respond.

• Employees know how to work around formal structures to get things done.

• When formal hierarchies interfere with service quality and delivering value to consumers, the use of informal hierarchies and social networks should be encouraged.