TRADITIONAL AND EMERGING ORGANISATIONAL DESIGNS

It is not unreasonable to expect that some changes to organisation structure might
be expressions of the influence of powerful individuals or coalitions. Efforts to change
the existing perceived distribution of power or reduce the perceived power of some
groups might lead a new CEO to implement a structure in which some positions
(or groups of positions) have new reporting relationships, changed responsibilities,
are reclassified or disappear altogether. Colloquially this is often referred to as ‘a
new broom sweeping clean’ to destabilise existing power structures and remove
some of the barriers to new strategy or policy implementation. (See Chapter 13
for further discussion of the influence of power in the design of service delivery
systems.)
When strategic and structural changes are being mooted and alternatives are being
discussed, it is worthwhile considering the power structure of the organisation and
the influence of varipus stakeholders (internal and external) on the decisions. From
this it is possible to determine the level of support (presence or absence) for various
change options as well as the likely implications for the various groups and individuals
affected by the changes. For example: How is power exercised? Which individuals
or groups have power in which circumstances? Who is lobbying for: what and why?
Who benefits or loses from the proposed changes?
TRADITIONAL AND EMERGING ORGANISATIONAL DESIGNS
Influences on organisational structure and performance
Alternative theoretical perspectives on organisations have been discussed broadly in
Chapter 4. Here we address primarily the relationship of organisational structure to
performance. Organisational structure is concerned with the relationships between
groups of people within the organisation. However, organisational design is about
designing or organising a structure that facilitates communication, integration,
sharing of resources, and overall recognition of the value and worth of these within
the organisation. Daft (1992, cited in Griffiths 1995, p 217) proposes that ‘organi.,.
sational structure is influenced by culture and values, as well as human processes
and leadership’. The structure will be a reflection of the culture and the purpose of
the facility.
The study of organisational structure and performance is a phenomenon that
became of increasing importance in the early 1900s. Theorists such as Frederick W
Taylor and Max Weber began to conceptualise ideas of organisational design that
would optimise productivity (Bolman & Deal 2003, p 45). Focus then turned to
management practices that delineated the clear division of labour, chain of command,
rules and regulations, decision-making processes, remuneration, job design and
specialisation and coordination of activities that would ultimately enable the product
or service to be delivered in the most cost-effective and efficient manner.
283
PART FOUR: HEALTH SERVICE ORGANISATIONS
WebeJ”s ideal bureaucracy formed the blueprint on whic’~ many organisations
based their structure (Robbins et al 2003, pp 41-2). The main characteristics of a
Weber bureaucracy (Hosking & Gardner 1996, p 20) are as follows:
• clearly defined jobs and specialisation with delegated authority;
• rules and regulations to maintain control;
11 hierarchical structure;
• recruitment and promotion on the basis of expertise;
11 well-defined and impartial performance management processes; and
11 job security via loyalty.
In more recent times organisations are attempting to divest themselves of heavy
bureaucratic frameworks. Changes in government policies, the finite health care
dollar and industrial restructuring within health care organisations have seen the
focus move from centralised management practice to devolution of decision-making
closer to the client. This has enabled some organisations to genuinely shed a tier of
management. Others have merely added one or more management levels (Griffiths
1995, p 219).
The types of organisational structures most commonly described are derived
from tne classifications of Mintzberg, who starts with the premise that organisatio’ns
require six major functional parts (Mintzberg 2003a, p 209). These include:
1 the operating core which is performing the major role of the organisation;
2 the strategic apex which plans and manages overall functions;
3 the middle line which provides the link between the former;
4 the techno-structure which ensures technical standardisation across the
organisation;
5 the support staff who support those involved in the major service provision
areas; and
6 the ideology which refers to the organisational culture.
Mintzberg (2003a, pp 220-6) also proposes that most organisational” structures
may evolve from seven basic specifications, which relate to the comparative degree of
power, influence or pressures exerted by the various parts (described above):
1 The simple structure with two levels: a centralised authority (or strategic apex)
and an operating core.
2 The machine bureaucracy which is very complex, requires a large technical
infrastructure and is usually structured according to function. There are many
layers between the strategic apex and operating core.
3 The professional bureaucracy which has a large operating core. This
organisation is very complex and formal but has a flat, decentralised profile.
Professionals are grouped within their own functional units (i.e. nursing,
medicine etc) and have significant autonomy.
4 The divisional structure which features decentralised decision-making within
semi-autonomous units.
284
1211 STRATEGY AND ORGANISATIONAL DESIGN IN HEALTH CARE
5 The ‘adhocracy’ which, as the name suggests, is a fluid arrangement with very
little formal structure, rules or procedures. The organisation is structured along
these lines to facilitate fast adaptation to changing environments. Decisionmaking
is delegated to those with the expertise rather than a centralised
authority.
6 The missionary structure which is based primarily on ideology with little
formalised structure.
7 The political structure, in which the parts are in conflict with each other. This
may be a permanent or temporary state.
Overview of types of traditional designs – benefits and shortcomings
, The types of organisational structures most commonly described within the health
care arena include {unctional, divisional, product/market and matrix, and varying
hybrids of the above. The adoption of these desig~s is seen in a variety of settings,
from the small radiology practice to the larger scale of the area/regional health
service.
Functional designs
The functional organisational structure sees the grouping together in departments of
those workers who perform the same function or n.”,:>tlnn:>’
CHIEF EXECUTIVE
ics and gynaecology
Paediatrics
Endocrine and renal
Neurology/neurosurgery
Gerontology/psychogeriatrics
Cardiology
Cardiothoracic surgery
Diagnostic physiology
Respiratory medicine
Radiology
Pathology
Nuclear medicine
ICU
Emergency department
Operating suite
Anaesthetics
Operating room
Recovery
Source: Adapted from Introductory health care management: a distance education module. This
is also part of the Graduate Certificate in Health Care Management offered by the New South
Wales College of Nursing
287
PART FOUR: HEALTH SERVICE ORGAIIJISATIONS
of resources and all other administrative responsibilities for the function of the
division are carried out. The primary role of the chief executive team is to monitor
and control the performance of the divisions. According to Mintzberg (2003b), ‘It
sets standards of achievement, generally in quantitative terms … and then monitors
the results’ (p 434). In these organisations, groupings are designed according to
specialty areas (Leatt et a12000, p 287). For example, in the health care setting, you
might routinely find a division of surgery and a division of medicine. These divisions
comprise teams across broad ranges of disciplines that are involved in the delivery of
the service for that specific division.
Over the last ten years, this divisional structure has increasingly incorporated allied health divisions which have an allied health professional as the director of the division. Allied health divisions have served to increase the professional and management
autonomy of the allied health disciplines as well as increase their influence on
organisational decision-making and access to resources. Therefore, their longstanding
collaboration and multi disciplinary approach to clinical work have been extended to
the managerial domain (Boyce 2004).
Since the mid 1980s, decision-making and management have been devolved
even further to more specific groupings of services according to specialty or clinical
stream (product line). These may include divisions such as an endocrine division, a
critical care services division or maternity services. Similarly, there are groupings of
multidisciplinary teams that are specifically involved with the provision of a range of
services for a particular casemix.
The size of the organisation can make timely decision-making in the central
bureaucracy more difficult, thus a degree of autonomy is afforded to the strategic
apex of each division and product line. This is desirable as those closest to the’
market/customer are best positioned to ensure that the service is delivered in the most
timely and efficient manner. However, in the highly regulated health care arena some
management functions will remain within the central bureaucracy in order to ensure
adherence to mandatory policies and procedures.
Traditionally in the ,health sector, the lack in devolution of decision-making to
the divisions and within divisions has allowed clinicians to divorce themselves from
the responsibility and, hence, accountability for managing resources. A product linel
divisional structure goes some way to addressing the aforementioned shortcomings.
Devolved clinical management aims to involve the major drivers of the health care
system (medical practitioners) and the providers of care (nurses) in the allocation
and utilisation of resources (McCaughan l$.c Picone 1994, p 520). Theoretically, the
hospital is composed of a series of indepen’dently functioning entities, with clinician
managers (both medical and nursing) at the helm, who outsource to support units
within the organisation for central services such as catering, pathology and diagnostic
radiology. These support units themselves function as separate business entities.
Advocates of the divisional or product line structure in health care organisations
argue that the advantages of these structural frameworks lie in their ability to allow the organisation to adapt more readily to the changing health care landscape and to
provide a closer interface with. the customer. Ideally such structures would facilitate
a more multidisciplinary collaborat,ive approach to patient care and an improvement
in the continuum of care. Furthermore it was hoped that the development of a more
team-oriented culture would reduce the traditional rivalry between the disciplines.
288
12 II!I STRATEGY AND ORGANISATIONAL DESIGN IN HEALTH CARE
Other advantages of the divisional design may be seen to include:
• top-level management has more time for planning, performance control and
strategy formulation;
• more suitable to changing environments;
• closer customer interface;
I faster decision-making processes;
I greater clinician accountability for resource utilisation;
• realisation of gains iq productivity and efficiency with ongoing reductions in
cost;
• expanded scope for the nursing and allied health professions within the
management role; and
• an’information management system that would provide timely and meaningful
data to enhance decision-making processes.
Disadvantages of the divisional design include: •
• competition between departments for resources;
• prioritising goals of division/product line above those of the organisation as a
whole; and
• the added cost of each division having its own decentralised management
structure.
Twenty years on, some research is demonstrating only limited gains, if any, in areas
·thought to benefit most from such structural reforms. Recent studies by Braithwaite
and West brook (2005, pp 10-17) question whether these structural models, which
they called clinical directorates, are delivering the anticipated outcomes. Their conclusions
indicate that, whilst product line structures may provide a model for delivery of
multidisciplinary team-based care, much greater reform at the micro-organisational
level is required to bring about larger scale organisation-wide gains. Furthermore
dear delineation of reporting to functional professional groupings such as nursing and medicine is not demonstrated. Whilst this diminishes the confusion of the dual
authority systems (as discussed in matrix structures), it may lead to some professional
groups feeling less represented within organisational decision-making. Braithwaite
and Westbrook (2005, p 16) comment that nurses and allied health professionals in
particular perceive that doctors continue to exert too much power.