Understanding and Designing Organizational Structures

Since time began, people have organized themselves into groups. The term organization has multiple meanings. It can refer to a business structure designed to support specific business goals and processes, or it can refer to a group of individuals working together to achieve a common purpose. Regardless of how the term is used, learning to determine how an organization accomplishes its work, how to operate productively within an organization, and how to influence organizational processes is essential to a successful professional nursing practice.

Organizational theory (sometimes called organizational studies) is the systematic analysis of how organizations and their component parts act and interact. Organizational theory is based largely on the systematic investigation of the effectiveness of specific organizational designs in achieving their purpose. Organizational theory development is a process of creating knowledge to understand the effect of identified factors, such as (1) organizational culture; (2) organizational technology, which is defined as all the work being carried out; and (3) organizational structure or organizational development. A purpose of such work is to determine how organizational effectiveness might be predicted or controlled through the design of the organizational structure.

Specific organizational theories provide insight into areas such as effective organizational structures, motivation of employees, decision-making, and leadership. A common framework in health care for analysis and application of organizational theory is systems theory. A system is an interacting collection of components or parts that together make up an integrated whole. The basic tenet of systems theory is that the individual components of any system interact with each other and with their environment. To be effective, baccalaureate-prepared nurses need to understand the specific part—role and function—they play within a system and how they interact, influence, and are influenced by other parts of the system.

An organization’s mission, vision, and philosophy form the foundation for its structure and performance as well as the development of the professional practice models it uses. An organization’s mission, or reason for the organization’s existence, influences the design of the structure (e.g., to meet the healthcare needs of a designated population, to provide supportive and stabilizing care to an acute care population, or to prepare patients for a peaceful death). The vision is the articulated goal to which the organization aspires. A vision statement conveys an inspirational view of how the organization wishes to be described at some future time. It suggests how far to strive in all endeavors. Another key factor influencing structure is the organization’s philosophy. A philosophy expresses the values and beliefs that members of the organization hold about the nature of their work, about the people to whom they provide service, and about themselves and others providing the services.

The mission statement defines the organization’s reason or purpose for being. The mission statement identifies the organization’s customers (individuals, families, populations, or communities) and the types of services offered, such as outreach, comprehensive care management, acute care, rehabilitation, or home care. It enacts the vision statement.

Nursing, as a profession providing a service within a healthcare agency, formulates its own mission statement that describes its contributions to achieve the agency’s mission. One of the purposes of the nursing profession is to provide nursing care to patients. The statement should define nursing based on theories that form the basis for the model of nursing to be used in guiding the process of nursing care delivery. Nursing’s mission statement tells why nursing exists within the context of the organization. This statement is written so that others within the organization can know and understand nursing’s role in achieving the agency’s mission. The mission should be the guiding framework for decision making. It should be known and understood by other healthcare professionals, by patients and their families, and by the community. It indicates the relationships among nurses and patients, other personnel in the organization, the community, as well as health and illness. The mission provides direction for the evolving statement of philosophy and the organizational structure. It should be reviewed for accuracy and updated routinely. Various work units that provide specific services such as intensive care, women’s health services, or hospice care may also formulate mission statements that detail their specific contributions to the overall organization.

A philosophy is a written statement that articulates the values and beliefs held about the nature of the work required to accomplish the mission and the nature and rights of both the people being served and those providing the service. A nursing philosophy states the vision of what nursing practice should be within the organization and how it contributes to the health of individuals and communities. For example, the organization’s mission statement may incorporate the provision of individualized care as an organizational purpose. The philosophy statement would then support this purpose through an expression of a belief in the responsibility of nursing staff to act as patient advocates and to provide quality care according to the wishes of the patient, family, and significant others.

An organization’s mission, vision, and philosophy both shape and reflect organizational culture. Organizational culture is the reflection of the norms or traditions of the organization and is exemplified by behaviors that illustrate values and beliefs. Examples include rituals and customary forms of practice, such as celebrations of promotions, degree attainment, professional performance, weddings, and retirements. Other examples of norms that reflect organizational culture are the characteristics of the people who are recognized as heroes by the organization and the behaviors—either positive or negative—that are accepted or tolerated within the organization.

To be most effective, organizational structures must reflect the organization’s mission, vision, philosophy, goals, and objectives. Organizational structure defines how work is organized, where decisions are made, and the authority and responsibility of workers. It provides a map for communication and outlines decision-making paths. As organizations change through acquisitions and mergers, it is essential that structure changes to accomplish revised missions.

The characteristics of different types of organizational structures provide a catalog of options to consider in designing structures that fit specific situations. Knowledge of these characteristics help leaders, managers, and nursing staff understand the expectations and structures in which they currently function.

Organizational designs are often classified by their characteristics of complexity, formalization, and centralization. Complexity concerns the division of labor in an organization, the specialization of that labor, the number of hierarchical levels, and the geographic dispersion of organizational units. Division of labor and specialization refer to the separation of processes into tasks that are performed by designated people. The horizontal dimension of an organizational chart, the graphic representation of work units and reporting relationships, relates to the division and specialization of labor functions attended by specialists. Hierarchy connotes lines of authority and responsibility. Chain of command is a term used to refer to the hierarchy and is depicted in vertical dimensions of organizational charts. Hierarchy vests authority in positions on an ascending line away from where work is performed and allows control of work. Staff members are often placed on a bottom level of the organization, and those in authority, who provide control, are placed in higher levels. Span of control refers to the number of subordinates a supervisor manages. For budgetary reasons, span of control is often a major focus for organizational restructuring. Although cost implications are present when a span of control is too narrow, when a span of control becomes too large, supervision can become less effective. The Research Perspective describes the effect of span of control.

Geographic dispersion refers to the physical location of units. Units of work may be in one building; in several buildings in one location; spread throughout a city; or in different counties, states, or countries. The more dispersed an organization is, the greater are the demands for creative designs that place decision-making related to patient care close to the patient and, consequently, far from corporate headquarters. A similar type of complexity exists in organizations that deliver care at multiple sites in the community; for example, the care delivery sites of an accountable care organization may be at great distances from the corporate office that has overall responsibility for the programs.

Formalization is the degree to which an organization has rules, stated in terms of policies that define a member’s function. The amount of formalization varies among institutions. Formalization is often inversely related to the degree of specialization and the number of professionals within the organization.

Centralization refers to the location where a decision is made. Decisions are made at the top of a centralized organization. In a decentralized organization, decisions are made at or close to the patient-care level. Highly centralized organizations often delegate responsibility (the obligation to perform the task) without the authority (the right to act, which is necessary to carry out the responsibility). For example, some hospitals have delegated both the responsibility and the authority for admission decisions to the charge nurse (decentralized), whereas others require the nurse supervisor or chief nurse executive to make such decisions (centralization). As the Center for Medicare & Medicaid Services (CMS) evolved guidelines to facilitate the delivery of health care, CMS identified that non-physicians, including registered nurses can write orders to admit patients so long as the practice fits with state laws and organizational policies.

• Centralization (the level of the organization on which decisions regarding carrying out work and remuneration for work are made)

• Formalization (the percentage of actions required to deliver patient care that is governed by written policy and procedures)

In healthcare organizations, several common types of organizational structures exist: functional, service line, matrix, or flat. Nursing organizations often combine characteristics of these structures to form a hybrid structure. Shared governance is an organizing structure designed to meet the changing needs of professional nursing organizations.

As the continuum of care moves health services outside of institutional parameters, different skill sets, relationships, and behavioral patterns will be required. Healthcare organizations are losing their traditional boundaries. Old boundaries of hierarchy, function, and geography are disappearing. Vertical integration aligns dissimilar but related entities such as hospital, home care agency, rehabilitation center, long-term care facility, insurance provider, and medical office/clinic. New technologies, fast-changing markets, and global competition are revolutionizing relationships in health care, and the roles that people play and the tasks that they perform have become blurred and ambiguous.

In the future, more nurses will practice in settings that extend beyond the walls of a single unit or building. Reframing or changing current static organizations into vibrant learning organizations will require significant effort. To be successful in the future, nurses must participate as active members in these living-learning organizations. Nurses, whether leaders, managers, or followers, must have the ability to work with other members of the organization and with society at large to design organizational models for care delivery that meet patient/customer needs and priorities. It is essential to take a new look at the nature of the work of nursing and propose innovative models for nursing practice that consider emerging laborsaving assistive technologies and rapidly changing healthcare needs. Employee participation and learning environments go hand in hand, and work redesign needs to be regarded as a continuous process. Nurses must value their and others’ autonomy to deal successfully in these new structures.

Highly successful nursing organizations have grasped the importance of a mission, vision, and philosophy that are meaningful to the practice of nursing and reflect those of the organization. Organizations may be structured in various ways to provide service, and no one approach is “best” for all in all circumstances. The culture of the organization derives from these critical documents, and when embedded, they are reflected in the care delivered.

A theory being used to explain healthcare systems today is chaos theory. This theory suggests that differences logically exist between and among various organizations as well as between and among the units within an organization. The constantly changing forces of people and the environment affect organizational structure, its functioning, and the services provided in ways that are not often well understood or predicted. Healthcare organizations are examples of complex, unpredictable systems where individuals (healthcare professionals, patients, families, etc.) interact in ways that are nonlinear yet interconnected in substantive and important ways. Chaos theory (complexity science) is increasingly being cited in the nursing literature and is beginning to be used as a theoretical framework for nursing practice in complex adaptive systems (CASs).

• Working in a Magnet™-designated facility means I have more control over the decisions that impact my patients.

• I prefer working in a hospital with a flat organizational structure. I have the chance to work with the decision makers in nursing.

The mission, vision, and philosophy of the organization determine how nursing care is delivered in a healthcare organization. Changes occurring in the organization’s mission affect both the culture of the workplace and the philosophies regarding the work required to accomplish the mission. Actualizing new missions and philosophies requires reengineered organizational structures that place decision-making authority and responsibility where care is delivered. Decision-making responsibility requires staff to understand the organization’s mission and to participate in the development of mission and philosophy statements.

• Vision

• Philosophy

• Organizational culture

• Factors influencing organizational development

• Characteristics of organizational structures

• Bureaucracy

• Types of organizational structures

• Emerging fluid relationships

• The overall mission of the organization and the mission of the specific unit in which a professional nurse is employed or is seeking employment provide information concerning the major focus of the work to be accomplished and the manner in which it will be accomplished.

• Understanding the philosophy of the organization and/or unit where work occurs provides knowledge of the behaviors that are valued in the delivery of patient care and in interactions with persons employed by the organization.

• Formal organizational structures describe the expected channels of communication and decision making.

• Matrix organizations typically have more than one person responsible for the work, and therefore it requires understanding both the service and the function.

• For a shared-governance structure to function effectively, the professionals providing the care must put mechanisms in place to promote decision-making about patient care.