organizational structure

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Chapter 3

Organizing the Workplace

[These slides are intended to be used in conjunction with Health Care Management by Donald J. Lombardi and John R. Schermerhorn, Jr. with Brian Kramer (the Text).    Please refer  to the Text for a more complete explanation of the materials covered herein and for all source material references.]

Copyright by John Wiley and Sons, 2006

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  • Organizing is the process of arranging people and other resources to work together to accomplish a goal.
  • Organization structure refers to the system of tasks, workflow, reporting relationships, and communication channels that link the diverse parts of an organization.
  • Restructuring is the process of changing an organization’s structure in an attempt to improve performance.

Common Organizational Structures

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Organizing and
Management Functions

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Formal and Informal Structures

  • The formal structure is the intended or official structure of an organization.
  • An organization chart is a diagram that identifies key positions, job titles, lines of authority, and communication within an organization.
  • An organizational chart may reveal the following about an organization:
  • the division of work
  • supervisory relationships
  • communication channels
  • major subunits
  • levels of management
  • The informal structure is the unofficial but often critical working relationships among organizational members, regardless of formal titles and relationships.

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  • Functional structure refers to an organizational strategy in which people with similar skills and performing similar tasks are grouped together.
  • The major advantages of a functional structure include:
  • efficient use of resources within and between functional areas
  • consistent and appropriate task assignments based on expertise and training within each functional area
  • high-quality technical problem-solving;
  • in-depth training and skill development within functions
  • clear career paths within functions.
  • Some disadvantages include:
  • creation of functional chimneys
  • reliance on upper management
  • confusion and responsibility-shifting

Functional Structures

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Divisional Structure

  • Divisional structures group together people who provide the same services, work within the same processes, serve similar audiences, or are located in the same area or geographical region.
  • Potential advantages include:
  • More flexibility in responding to environmental changes
  • Improved coordination across functional departments
  • Clearer points of responsibility for delivery of services or products
  • Expertise focused on specific patients or customers, products, and regions
  • Greater ease in changing size by adding or deleting divisions.
  • Potential disadvantages include:
  • Redundancy
  • Internal competition
  • Tunnel vision

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  • Matrix structure combines elements of both the functional and divisional structures, using permanent cross-functional teams to integrate functional expertise with divisional focus.
  • Potential advantages include:
  • more interfunctional cooperation in operations
  • increased flexibility in meeting changing demands
  • better customer service championed by individual project managers
  • better performance accountability through the project managers
  • improved problem-solving at the team level
  • improved strategic management
  • Some disadvantages:
  • Power struggles (two bosses)
  • Priority confusion
  • Tunnel vision
  • Expense

Matrix Structure

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Recent Developments

  • The global economy and competition have health care managers searching for organizational structures that better meet today’s challenges.
  • Traditional vertical structures are being replaced with horizontal structures.

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The Team Approach

  • A team is simply a group of workers organized to accomplish tasks.
  • Teams are the building blocks of today’s new and more horizontal organizational forms.

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  • Two other trends in organization are networks and boundaryless organizations.
  • One type of network is a health care network where different medical services join together to provide comprehensive health care, often sharing the services of one business office and laboratory.
  • Boundaryless organization are an increasingly common structure in the business world, which combines teams and network structures for temporary purposes.

Networks and
Boundaryless Organizations

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  • Among these trends is a common theme: managers (and indeed all workers) must make the necessary adjustments to streamline for cost efficiency and to allow increased worker involvement in all aspects of operations.
  • Shorter Chains of Command. The chain of command is the line of authority that vertically links all positions with successively higher levels of management.
  • Trend is to streamline organizations by cutting unnecessary levels of management.
  • Wider Spans of Control. A span of control is the number of people reporting directly to a manager within an organizational structure.
  • Trend is toward wider spans of control that shorten chains of command and increase worker empowerment.

Recent Trends and Changes

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  • Less Unity of Command. Under the unity-of-command principle, each person in an organization should report to one and only one supervisor.
  • Trend is for less, not more, unity of command in organizations.
  • More Delegation and Empowerment. Delegation is the process of distributing and entrusting work to other people.
  • For today’s health care manager, effectively delegating responsibilities and empowering team members to make strong, good decisions is critical for success of the work team and the entire organization.

More Trends and Changes

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  • Decentralization with Centralization. Centralization refers to traditional, top-down decision making while decentralization refers to dispersed decision making.
  • Trend is toward more decentralization in organizations, while utilizing advances in information systems to retain centralized control.
  • Reduced Use of Staff.
  • Trend is for organizations to minimize the use of staff components in the quest for increased operating efficiency. Specialized services or skills are often hired on a contract basis.

More Trends and Changes

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Designing Effective Organizations

Bureaucratic vs. Adaptive Designs

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Making Design Decisions

  • “Structure follows strategy”
  • Stability oriented vs. growth oriented
  • Five critical checks prior to a change:
  • Check 1: Does the design fit well with the major problems and opportunities of the external environment?
  • Check 2: Does the design support the implementation of strategies and the accomplishment of key operating objectives?
  • Check 3: Does the design support core technologies and allow them to be used to best advantage?
  • Check 4: Can the design handle changes in organizational size and different stages in the organizational life cycle?
  • Check 5: Does the design support and empower workers and allow their talents to be used to best advantage?

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Incorporating Subsystems

  • Small departments, work units, or teams headed by managers are subsystems that perform specialized tasks within organizations.
  • Concepts important to successful subsystem use include:
  • differentiation, or the degree of difference that exists between the internal components of the organization
  • integration, the level of coordination achieved among an organization’s internal components

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Evaluating Work Processes

  • Process reengineering is the systematic and complete analysis of work processes and the design of new and better ones.
  • Through process value analysis managers identify and carefully evaluate each step in a workflow.
  • Each step must be important, useful, and add value to the overall purpose of the organization; if not, the step is eliminated.

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Teams

  • A team is a group of workers organized to accomplish tasks.
  • Teamwork refers to the process of people working together to accomplish goals.
  • The usefulness of teams includes:
  • increasing resources for problem-solving
  • fostering creativity and innovation
  • improving the quality of decision making
  • enhancing members’ commitments to tasks
  • raising motivation through collective action
  • helping control and discipline members
  • satisfying individual needs as organizations grow in size

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Committees and Task Forces

  • Committees usually operate with a continuing purpose, while its membership may change over time.
  • Task forces are more temporary, and their official tasks are very specific and time defined.
  • To help achieve desired results
  • Select appropriate members
  • Clearly define the purpose
  • Carefully select a leader
  • Periodically review progress

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Other Team Trends

  • Cross-functional teams: members from different functional units work on a specific problem or task.
  • Employee involvement teams: meet on a regular basis outside of their formal assignments, with the goal of applying their expertise and attention to continuous improvement.
  • Quality circle: an employee involvement team focused on improving work quality.
  • Virtual teams: work together and solve problems through largely computer-mediated rather than face-to-face interactions.
  • Self-managing work team: workers whose jobs have a high degree of task interdependence and who have been given authority to make many decisions about how they go about doing the required work.

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© 2007 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.

Copyright by John Wiley and Sons, 2006

Copyright by John Wiley and Sons, 2006