This document discusses various organizational theories and structures in healthcare management. It begins by outlining the objectives of discussing management theories, organizational structures, and healthcare organization types. It then covers classical, humanistic, systems, contingency, chaos, and complexity organizational theories. The document also examines factors that influence organizational structure like environment, strategy, technology, and human resources. Finally, it defines and describes different types of traditional organizational structures used in healthcare like functional, hybrid, matrix, parallel, service-line, and shared governance structures.

1. MANAGEMENT ORGANIZATIONAL THEORIES
STRUCTURE AND CULTURE
by
Shahla Arshad
Lecturer
KMU-INS

2. OBJECTIVES
At the end of this session the students will be able to:
 Discuss various theories of Management.
 Identify various types of organizational structures
 Discuss different types of health care organizations
 Define staff and line relationship
 Describe different levels of management.
 Differentiate between formal and informal structure
within the organization.

3. Organizational Structure:
• Organizational Structure: formal system of
task & reporting relationships showing how
workers use resources.
 Organizational design: managers make specific
choices resulting in a given organizational structure.

4. Determinants of organizational
Structure
 The environment: The quicker the environment
changes, the more problems face managers.
 Structure must be more flexible when environmental
change is rapid.
 Usually need to decentralize authority.
 Strategy: Different strategies require the use of
different structures.
 A differentiation strategy needs a flexible structure,
low cost may need a more formal structure.
 Increased vertical integration or diversification also
requires a more flexible structure

5.  Technology: The combination of skills, knowledge, tools,
equipment, computers and machines used in the
organization.
 More complex technology makes it harder for managers to
regulate the organization. Technology can be measured by:
 Task Variety: new problems a manager encounters.
 Task Analyzability: programmed solutions available to a
manager to solve problems.
 High task variety and low analyzability present many
unique problems to managers.
 Flexible structure works best in these conditions.
 Low task variety and high analyzability allow managers
to rely on established procedures.

6. Technology & People
 Small Batch Technology: produces small quantities of
one-of-a-kind products.
 Based on the skills of the workers who need a flexible
structure.
 Mass Production Technology: automated machines
make high volumes of standard products.
 Workers perform repetitive tasks so a formal structure
works well.
 Continuous Process Technology: totally mechanized
systems of automatic machines.
 Workers must watch for unexpected problems and
react quickly. A flexible structure is needed here.

7.  Human Resources: the final factor affecting
organizational structure.
 Higher skilled workers who need to work in teams
usually need a more flexible structure.
 Higher skilled workers often have professional norms.
Managers must take into account all four
factors (environment, strategy, technology
and human resources) when designing the
structure of the organization.

8. ORGANIZATION
An organization is a collection of people working
together under a defined structure to achieve
predetermined outcomes using financial, human, and
material resources.
OR
It is thought as the organization is a stage, actors
come and play their role. Play is successful when all the
actors performs well. Otherwise it gets/looses its
importance.

9. ORGANIZATIONAL THEORIES
 Classical theory
 Humanistic theory
 System theory
 Contingency theory
 Chaos theory
 Complexity theory

10. CLASSICAL THEORY
• Developed by Frederick Taylor. Classical theory is a
traditional approach which focus exclusively on the
structure of formal organization.
• Its main focus is efficiency through design; people
working more rationally and productively through a
well defined task or organizational design.

11. IMPORTANCE OF CLASSICAL THEORY
The Theory is designed for:
1. Organizational structure
2. Productivity
3. Right people for the right job
4. Organizational success and survival

12. Classical theory is built around four elements:
 Division And Specialization Of Labor
 Organizational Structure
 Chain Of Command
 Span Of Control

13. 1-Division and Specialization of Labor
Dividing the work reduces the number of tasks that each
employee must carry out, in that way increasing
efficiency and improving the organization’s product.
This concept used to increase proficiency and
specialization.
2-Organizational Structure
Organizational structure describes the arrangement of the
work group. Classical theorists developed the concept of
departmentalization as a means to maintain command,
authority, and provide a formal system for
communication.

14. Max Weber (1958) proposed the term bureaucracy to
define the ideal, rational, most efficient form of
organization. Today this word has a negative
implication, suggesting long waits, inefficiency, and
red tape.
3-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.
Responsibility: is the obligation to attain objectives or
perform certain functions. Both are derived from
one’s position within the organization and define
accountability. The line of authority is such that
higher levels of management delegate work to those
below them in the organization.

15. Line Authority
The linear hierarchy through which activity is directed.
Staff Authority
An advisory relationship, recommendations and
guidance are offered but responsibility for the work is
assigned to others.

16. 4-Span of Control
Span of control addresses the realistic concern of how many
employees a manager can effectively supervise.
Complex organizations usually have numerous departments
that are highly specialized and differentiated ,authority is
centralized, resulting in a tall organizational structure with
many small work groups.
Less complex organizations have flat structures, authority is
decentralized, with several managers supervising large work
groups.

19. HUMANISTIC THEORY
• Criticism of classical theory led to the development of
humanistic theory. A human relations approach identified in
1930s. A major assumption of this theory is that people
desire social relationships, respond to group pressures, and
search for personal fulfillment.
• People oriented and seek profits for human .
• This theory was developed as the result of a series of studies
conducted by the Western Electric Company at its
Hawthorne plant in Chicago.
• Base on the idea of human needs and human values.

20.  The electric company had specially made research to
determine there was a relationship between productivity
and work environments. The original purpose of the
Hawthorne studies was to examine how different aspects
of the work environment, such as lighting, the timing of
breaks, and the length of the workday, had on worker
productivity.
 The results were surprising and the researchers
concluded at the time that workers were actually
responding to the increased attention from their
supervisors.

21. • The effect was first described in the 1950s by researcher
Henry A.Landsberger during his analysis of experiments
conducted during the 1920s and 1930s. The phenomenon
is named on the location where the experiments took
place .
• The Hawthorne effect is a term referring to the tendency
of some people to work harder and perform better when
they participate in an experiment. The term is often used
to suggest that individuals may change their behavior
due to the attention they are receiving from researchers.

22. SYSTEMS THEORY
Systems theory is one of the dominant organizational
theories in management today.
Organizational theory defines system as a set of interrelated
parts arranged in a unified whole (Robbins ,1983).
It treats an organization as either an open or closed system.
Close system is not affected by its environment
Most approaches treat and organization as an open system.
System theorists believe all organizational component are
interrelated .change in one component may affect all other
component. Components are:
 In put
 Through put
 Out put

23. Resources, or input
like employees, patients, physician, materials, money,
equipment and information
process called throughput
Within the organization, energy and resources are
utilized and transformed
product, or output
Education, restored health, rehabilitation
Disease protection , Health promotion
Feedback Loops
Positive feedback loops
Negative feedback loops

24. CONTINGENCY THEORY
Edward Fiedler proposed the model in 1964.
Contingency theory believe that organizational
performance can be enhanced by matching an
organization’s structure to its environment.
2 basic ways in which managers can organize and
control an organization’s activities in response to its
external environment:
– Mechanistic Structure
– Organic Structure

25. Mechanistic Structure
A mechanistic structure for organizations in stable
environments. It is characterized by its
(1) highly centralized authority,
(2) formalized procedures and practices,
(3) specialized functions.
Organic Structure
According to Burns and Stalker
an organic organization is one that is very flexible
and is able to adapt well to changes. decentralized
decision-making.

26. CHAOS THEORY
Edward Lorenz given the Chaos theory, which was
inspired by the finding of quantum mechanics, which
challenges us to look at organizations and the nature
of relationships and proposes that nature’s work does
not follow a straight line. Chaos theory suggests that
the drive to create permanent organizational structures
is doomed to fail. The set of rules that guided the
industrial philosophy of organizational function and
integrity must be discarded, and newer principles that
ensure flexibility, fluidity, speed of adaptability, and
cultural sensitivity must emerge.

27. COMPLEXITY THEORY
Complexity theory originated in the computational
sciences when scientists noted that random events
interfered with expectations. The theory is useful in
health care because the environment is extensive with
randomness and complex tasks.
For example Patients’ condition change immediately,
necessary staff are not available, or equipment fails,
all without warning..

28. Tasks involve complex interactions between and
among staff, patients, and the environment.
Managing in such ambiguous circumstances requires
every aspect of the system as it interacts and adapts
to changes
Complexity theory beliefs that a company's
leadership success is based on knowledge,
innovation, creativity, and learning rather than just
production.

29. Traditional Organizational Structures
Various organizational structures have been utilized over time. Examples
include
 Functional Structures
 Hybrid Structures
 Matrix Structures
 Parallel Structures.
 Service-line Structures
 Shared Governance

30. FUNCTIONAL STRUCTURE
In functional structures, employees are grouped in
departments by specialty, with similar tasks being
performed by the same group, similar groups operating
out of the same department, and similar departments
reporting to the same manager. Functional structures
tend to centralize decision making .

31. Functional Structure.
CEO
Nursing Pharmacy Dietary

32. HYBRID STRUCTURE
This structure is a form of departmentalization, which combines
both functional and divisional structure. Particularly large
organizations adopt this structure to gain the advantages of both
functional and divisional structures.
In a hybrid organizational structure, employees are asked to
work on multiple projects and report to multiple bosses.
• Functional structure gives the benefits of economies of scale,
in-depth expertise and resource utilization and efficiencies.
• Divisional structure gives the benefits of specialization of
products, services and markets.

33. weakness of hybrid structures is conflict between top
administration and managers. Managers often dislike
administrators’ interruption into what they see as their
own area of responsibility.

34. Hybrid Structure
Chief executive
maintenance dietary
nursing admitting pharmacy billing
Rural clinics

35. MATRIX STRUCTURE
This type of departmentalization superimposes horizontal set of
divisional reporting relationships on hierarchical functional
structure. It is also known as grid or project or product
management organization. It is a combination of both functional
and a divisional organization at the same time. Therefore, it enjoys
two chains of command—vertical and horizontal.
In a matrix structure, different managers are responsible for
function and product. For example, the nurse manager for the
oncology clinic may report to the vice president for nursing as
well as the vice president for outpatient services.

36. Matrix structure
Oncology Pediatrics Family
medicine
Vice President outpatient services
Vice President
Nursing
Services
Nurse manager
Nurse manager
Nurse manager

37. The matrix is appropriate in a highly uncertain
environment that changes frequently but also requires
organizational expertise.
A major weakness of the matrix structure is its dual
authority, which can be frustrating and confusing for
departmental managers and employees. Excellent
interpersonal skills are required from the managers
involved. A matrix organization is time-consuming
because frequent meetings are required to resolve
problems and conflicts.

38. PARALLEL STRUCTURE
Parallel structure is a structure unique to health care.
It is the result of complex relationships that exist
between the formal authority of the health care
organization and the authority of its medical staff. In
a parallel structure, the medical staff is separate and
autonomous from the organization. Two lines of
authority , One line extends from the chief executive
officer and the other line extends from the medical
staff. Parallel structures are becoming less successful
in health care organizations.

39. SERVICE-LINE STRUCTURES
More common in health care organizations today are
service-line structures (Nugent et al., 2008). Service-line
structures also are called product-line or service-integrated
structures. In a service-line structure, clinical services are
organized around patients with specific conditions . One of
the strengths of the service-line structure is its potential for
rapid change in a changing environment. Because each
division is specialized and its outputs can be tailored to the
situation, client satisfaction is high. Coordination across
function (nursing, dietary, pharmacy, and so on) occurs
easily; work partners identify with their own service and can
compromise or collaborate with other service functions to
meet service goals and reduce conflict.

40. Services integrated structure

41. SHARED GOVERNANCE
Shared governance is a process for empowering nurses in
the practice setting. It is based on a philosophy that
nursing practice is best determined by nurses. Participative
decision making is the hallmark of shared governance and
a standard for Magnet certification.
Interdependence and accountability are the basis for
constructing a network of making nursing practice
decisions in a decentralized environment.
As a result, nurses gain significant control over their
practice, efficiency and accountability are improved, and
feelings of powerlessness are diminished.

42. ORGANIZATIONAL ENVIRONMENT
AND CULTURE
 The terms organizational environment and
organizational culture both describe internal
conditions in the work setting.
 Organizational environment is the system wide
conditions that contribute to a positive or negative
work setting. In 2005, the American Association of
Critical-Care Nurses identified six characteristics of
a healthy work environment (AACN, 2011).

43. CHARACTERISTICS OF
ORGANIZATIONAL ENVIRONMENT
The characteristics are:
 Skilled communication
 True collaboration
 Effective decision making
 Appropriate staffing
 Meaningful recognition
 Authentic leadership

44. HOW TO ASSESS ORGANIZATIONAL
ENVIRONMENT
One way to assess the organizational environment is to
evaluate the qualities of those hired for key positions in
the organization. An organization in which nursing
leaders are innovative, creative, and energetic will tend
to operate in a fast-moving, goal-oriented fashion.

45. ORGANIZATIONAL CULTURE
 Organizational culture, on the other hand, are the basic
assumptions and values held by members of the
organization (Sullivan, 2013). These are often known as
the unstated “rules of the game.” For example, who
wears a lab coat? When is report given and To whom?
Is lateness tolerated? How late is acceptable?
Like environment, organizational culture varies from
one institution to the next and subcultures and even
countercultures, groups whose values and goals differ
significantly from those of the dominant organization,
may exist.

46. TYPES OF HEALTH CARE ORGANIZATIONS
 Hospital
 Long-term care facilities
 Ambulatory care center
 Home health care Agencies
 Free standing clinics
 Temporary service agencies
 Managed health care organizations

47. HOSPITALS
Hospitals are frequently classified by length of
stay and type of service. Most hospitals are acute
(short-term or episodic) care facilities, and they
may be classified as general or special care
facilities, such as pediatric, rehabilitative, and
psychiatric facilities. Many hospitals also serve as
teaching institutions for nurses, physicians, and
other health care professionals.
.

48. LONG-TERM CARE FACILITIES
Long-term care facilities provide professional
nursing care and rehabilitative services. They may
be free standing, part of a hospital or affiliated
with a health care organization. Usually length of
stay is limited. Residential care facilities, also
known as nursing homes are sheltered
environment in which long-term care is provided
by nursing assistants with supervision from
licensed professional or registered nurses.

49. AMBULATORY CARE CENTER
A few examples of the verity of ambulatory
services available like:
physician’s offices, emergency rooms, surgical
centers, birth centers, diagnostic imaging
centers clinics , pharmacies and family
planning clinics.

50. HOME HEALTH CARE AGENCIES
Home health care is the intermittent temporary delivery of
health care in the home by skilled or unskilled providers.
More people are surviving life-threatening illnesses or
trauma and require extended care. The primary service
provided by home care agencies is nursing care and also
offer other professional services such as physical or
occupational therapy and durable medical equipment such
as ventilators, hospital beds, home oxygen equipment and
other medical supplies.
Hospice care for the final days of a patient’s terminal illness
may be provided by a home care agency or a hospital.

51. FREE STANDING CLINICS
Staffed by nurse practitioners these clinics provide
physical or walk-in patients for common and
reoccurring minor illness such as cold or sore
throat.
TEMPORARY SERVICE AGENCIES
These agencies provide nurses and other health
care workers to hospitals that are temporarily
short staffed. They also provide private duty
nurse to individual patients either at home or in
the hospital.

52. MANAGED HEALTH CARE ORGANIZATIONS
The Managed health care organization is a
system in which a group of providers is
responsible for delivering services through an
organized arrangement with a group of
individuals e.g. all employs of one
organization .

53. LEVELS OF MANAGEMENT
Level of Management determines the chain of control and
the quantity of power and position that is given to any
individual in an organization.
 Managerial or the Top Level Management
 Executive or Middle Level Management
 Supervisory or Operative Level Management

54. MANAGERIAL OR THE TOP LEVEL MANAGEMENT
This level consists of the board of directors and managing
director. It is the supreme source of power . it manages
the policies and procedures of an entity. Their main
responsibility lies in planning and coordinating.
EXECUTIVE OR MIDDLE LEVEL MANAGEMENT
Departmental managers form this level of management.
These people are directly accountable to the top
management for functioning of their respective
departments. Their main role comes under the directional
and managerial functions of an organization.

55. SUPERVISORY OR OPERATIVE LEVEL MANAGEMENT
The lower level managers are the first line of
managers as they attribute at the base of operations,
so they are essential personnel that communicates the
fundamental problems of the organization to the
higher levels they solve issues of the workers and are
responsible for the maintenance of appropriate
relationship within the organization. They are also
responsible for training, supervising and directing the
operative employees.

56. Difference Between Formal And Informal Structure
Within The Organization
Formal Organization:
Is an organization in which job of each member is
clearly defined, whose authority, responsibility and
accountability are fixed.
Informal Organization:
Is formed within the formal organization as a
network of interpersonal relationship when people
interact with each other.