Organizational Environment and Culture

Organizational Environment and Culture

Designing Organizations 2

1. Discuss how organizational theories differ.

2. Describe the different types of health care organizations.

3. Explain how health care organizations are structured.

4. Discuss various ways that health care is provided.

5. Demonstrate how strategic planning guides the organization’s future.

6. Discuss how the organizational environment and culture affect workplace conditions.

Learning Outcomes After completing this chapter, you will be able to:

Key Terms Accountable care organization Bureaucracy Capitation Chain of command Diversification Goals Hawthorne effect Horizontal integration Integrated health care networks Line authority

Logic model Medical home Mission Objectives Organization Organizational culture Organizational environment Philosophy Redesign Retail medicine

Service-line structures Shared governance Span of control Staff authority Strategic planning Strategies Throughput Values Vertical integration Vision statement

12 PART 1 • UNDERSTANDING NURSING MANAGEMENT AND ORGANIZATIONS

A n organization is a collection of people working together under a defined structure to achieve predetermined outcomes using financial, human, and material resources. The justification for developing organizations is both rational and economic. Coordinated efforts capture more information and knowledge, purchase more technology, and produce more goods, services, opportunities, and securities than individual efforts. This chapter discusses or- ganizational theory, structures, and functions.

Traditional Organizational Theories The earliest recorded example of organizational thinking comes from the ancient Sumerian civi- lization, around 5000 b.c. The early Egyptians, Babylonians, Greeks, and Romans also gave thought to how groups were organized. Later, Machiavelli in the 1500s and Adam Smith in 1776 established the management principles we know as specialization and division of labor. Never- theless, organizational theory remained largely unexplored until the Industrial Revolution during the late 1800s and early 1900s, when a number of approaches to the structure and management of organizations developed. The early philosophies are traditionally labeled classical theory and humanistic theory while later approaches include systems theory, contingency theory, chaos theory, and complexity theory.

Classical Theory The classical approach to organizations focuses almost exclusively on the structure of the formal organization. The main premise is efficiency through design. People are seen as operating most productively within a rational and well-defined task or organizational design. Therefore, one designs an organization by subdividing work, specifying tasks to be done, and only then fitting people into the plan. Classical theory is built around four elements: division and specialization of labor, organizational structure, chain of command, and span of control.

Division and Specialization of Labor Dividing the work reduces the number of tasks that each employee must carry out, thereby increasing efficiency and improving the organization’s product. This concept lends itself to proficiency and specialization. Therefore, division of work and specialization are seen as economically beneficial. In addition, managers can standardize the work to be done, which in turn provides greater control.

Organizational Structure Organizational structure describes the arrangement of the work group. It is a rational approach for designing an effective organization. Classical theorists developed the concept of departmentaliza- tion as a means to maintain command, reinforce authority, and provide a formal system for commu- nication. The design of the organization is intended to foster the organization’s survival and success.

Characteristically, the structure takes shape as a set of differentiated but interrelated func- tions. Max Weber (1958) proposed the term bureaucracy to define the ideal, intentionally ratio- nal, most efficient form of organization. Today this word has a negative connotation, suggesting long waits, inefficiency, and red tape.

Chain of Command The chain of command is the hierarchy of authority and responsibility within the organization. Authority is the right or power to direct activity, whereas responsibility is the obligation to attain objectives or perform certain functions. Both are derived from one’s position within the organi- zation and define accountability. The line of authority is such that higher levels of management delegate work to those below them in the organization.

One type of authority is line authority, the linear hierarchy through which activity is directed. Another type is staff authority, an advisory relationship; recommendations and advice

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