Chapter 10 Organization Design Purpose and Overview Purpose

Purpose and Overview • Purpose – To explore how decisions are made about designing

Purpose and Overview • Overview – The Meaning of Organizational Design – Levels of

The Meaning of Organizational Design • Building blocks of organization are arranged to improve

The Meaning of Organizational Design • Organization Design – A dynamic process controlling outcomes

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

The Meaning of Organizational Design • Management’s Role Copyright © 2006 by Thomson Delmar

The Meaning of Organizational Design • When a design should be reconsidered – Severe

Levels of Organization Design Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Levels of Organization Design • Designing a Position – Identify: • Major responsibilities and

Levels of Organization Design • Designing a Work Group – Clarify • Specific purpose

Levels of Organization Design • Designing Work Groups – Group units to maximize use

Levels of Organization Design • Designing a Total Organization – Enormous challenge – Extensive

Levels of Organization Design • Designing a Network – Coordination of services and client

Levels of Organization Design • Designing a Health System – Centralization vs. decentralization •

Systematic Assessment Before Design Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Designs for a Variety of Health Services Organizations • Differentiation • Integration • All

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

Designs for a Variety of Health Services Organizations • Functional Design – Enables decision

Designs for a Variety of Health Services Organizations • Functional Design Copyright © 2006

Designs for a Variety of Health Services Organizations • Divisional Design – Organizational divisions

Designs for a Variety of Health Services Organizations • Divisional Design Copyright © 2006

Designs for a Variety of Health Services Organizations • Matrix Design – Improves coordination

Designs for a Variety of Health Services Organizations • Matrix Design Copyright © 2006

Designs for a Variety of Health Services Organizations • Parallel Design – Bureaucratic or

Designs for a Variety of Health Services Organizations • Parallel Design – Advantages •

Designs for a Variety of Health Services Organizations • Parallel Design Copyright © 2006

Designs for a Variety of Health Services Organizations • Product/Service Line or Program Design

Designs for a Variety of Health Services Organizations • Product/Service Line Copyright © 2006

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

Influences on Future Organization Designs • The Future Environment – Changing demographic characteristics –

Influences on Future Organization Designs • The Future Environment – Involvement in community to

Influences on Future Organization Designs • The Future Environment – Changing reimbursement systems –

Influences on Future Organization Designs • The Future Environment – Demand for accountability and

Influences on Future Organization Designs • The Organization – Greater emphasis on teamwork –

Influences on Future Organization Designs • The Organization – Demands to control costs, efficiency,

Influences on Future Organization Designs • The Organization – Changing working relationships – Increasing

Influences on Future Organization Designs • The Organization – Managing conflict creatively – Collaboration

Influences on Future Organization Designs • Culture – Focus on "customer" and patient-centered care

Influences on Future Organization Designs • Culture – Use of evidence and health outcome

Influences on Future Organization Designs • Culture – Value of nonhierarchical leaders who can

Influences on Future Organization Designs • Culture – Integrating functions and clinical processes –

Influences on Future Organization Designs • Human Resources – Acute shortage of nursing personnel

Influences on Future Organization Designs • Human Resources – Emphasis on horizontal teams and

Influences on Future Organization Designs • Human Resources – More women in management require

Influences on Future Organization Designs • Human Resources – Physicians becoming employees – Shortages

Influences on Future Organization Designs • Human Resources – Increasing unionization of workers –

Influences on Future Organization Designs • Human Resources – Succession planning, career planning, and

Influences on Future Organization Designs • The Political Process – Informal leaders may be

Organization in Transition • Life Cycles – Four phases (Starkweather and Kisch): • Search

Organization in Transition • Designs for Quality Improvement – Quality of care – Quality

Slides: 56

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Chapter 10 Organization Design

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 3

The Meaning of Organizational Design • Building blocks of organization are arranged to improve effectiveness and adaptive capacity – Authority – Responsibility – Accountability – Information – Rewards Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 4

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 8

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 10

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 11

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 12

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 14

Levels of Organization Design • Designing a Health System – Centralization vs. decentralization • Setting policy • Initiating activities • Granting final approval Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 15

Designs for a Variety of Health Services Organizations • Functional Design – Specialized labor divided into departments – Most useful when organization has few products or goals Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 19

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 20

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 22

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 24

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 26

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 27

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 29

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 30

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 31

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 32

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 33

Influences on Future Organization Designs • The Future Environment – Changing demographic characteristics – Public and consumer sophistication – Range of services provided outside traditional hospitals Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 36

Influences on Future Organization Designs • The Future Environment – Involvement in community to address underlying health issues – Increasing competition – Increasing regulatory pressures Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 37

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 38

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 39

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 40

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 41

Influences on Future Organization Designs • The Organization – Changing working relationships – Increasing use of information technology – Increasing need to coordinate activities internally Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 42

Influences on Future Organization Designs • The Organization – Managing conflict creatively – Collaboration among public and private organizations to address preventable diseases Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 43

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 44

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 45

Influences on Future Organization Designs • Culture – Value of nonhierarchical leaders who can lead change processes – Emphasis on teamwork and collaboration with nontraditional partners Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 46

Influences on Future Organization Designs • Culture – Integrating functions and clinical processes – Trust development – Creating a culture of patient safety – Promoting ethical work practices Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 47

Influences on Future Organization Designs • Human Resources – Acute shortage of nursing personnel – Emphasis on cross-training vs. traditional professional training Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 48

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 49

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 50

Influences on Future Organization Designs • Human Resources – Physicians becoming employees – Shortages of key health services professionals – Increasing need for managers with professional training Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 51

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 52

Influences on Future Organization Designs • Human Resources – Succession planning, career planning, and management development – Pressure to provide continuing education, especially for clinical managers Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 53

Influences on Future Organization Designs • The Political Process – Informal leaders may be helpful – Better management to identify key players in redesign process Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 54

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 Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED. 56