Management Lecture 3

Political Science

Provides insight into organizational politics and informal organizational structures that greatly influence the functioning of an organization

Reactive planning

Reactive strategies are often necessary, especially in industries that are changing rapidly

Principles of organization

Start at the center and work your way out

*Fully Bolded Terms*

Terms that are totally bolded, represent concepts that were deemed most important for the exam

American Hospital Association (AHA) *Vision*

The AHA vision is of a society of healthy communities, where all individuals reach their highest potential for health.

Formalization: Presence of rules

The degree to which the behavior of organizational members is subject to organizational control

*Spatial Differentiation*

The degree to which the location of an organization's units is in one place or spread across several locations. -Independent pharmacies: one location -Large health systems or chain pharmacies: multiple locations

SWOT Analysis: External opportunities and threats

The extent of competition from other pharmacy organizations, the availability of technology, regulations that may help or hinder the business, availability of reimbursement for services provided (i.e. clinical or cognitive pharmacy service), costs incurred by the pharmacy organization, political issues having an impact on health delivery, and changes in the market and types of customers served by the organization

Formalization: Impersonality

The extent to which both organization members and outsiders are treated without regard to individual qualities

*Centralization*

The extent to which decision making is concentrated at a single point in the organization.

Formalization: Procedural specifications

The extent to which organization members must follow organizationally defined techniques in dealing with situations they encounter

Formalization: Technical competence

The extent to which organizationally defined "universal" standards are used in the personnel selection and advancement process

The revenue and expense statement is also referred to as what?

The profit and loss statement

Preplanning Phase

The steps necessary to organize the strategic planning effort-or planning for the planning

Values

These form the reason for existence, the philosophy, and the purpose of the organization

American Hospital Association (AHA) *Mission*

To advance the health of individuals and communities. The AHA leads, represents and serves hospitals, health systems and other related organizations that are accountable to the community and committed to health improvement.

Strategic planning: The purpose

To ensure that the organization is doing the right things now and in future

What is the key component of strategic planning?

To identify time periods within which goals are to be reached

*Mission Statement Example*

"The *mission* of The University of Texas M. D. Anderson Cancer Center is to eliminate cancer in Texas, the nation, and the world"

*Communication of the business plan: Components of the written document (actual business plan)*

*There is a test question about "communicating the plan". He won't ask about the eight objectives, but he thinks this is important.* 1. Executive summary 2. Background and description 3. Market analysis and strategy 4. Operational structure and processes 5. Financial projections 6. Milestones, schedule, and action plan 7. Critical risks and opportunities 8. Exit strategy 9. Conclusion 10. Supportive documents

*Mission Statement*

-*Mission* is the purpose of the company -The *mission statement* defines what the company does or at least should be doing

Financial projections

-Also known as *financial pro forma* -Identifies estimated *expenditures* and *revenue* over the first 3-5 years of the program. -Financial data are best presented in a *revenue and expense statement*

*Company Slogan*

-Convey a message about the organization -ex. Nike: Just do it

Organizational culture

-Defined as the system of shared meaning held by members that distinguishes one organization from another -*Culture* refers to the understandings and beliefs regarding how "things are done around here". -*Climate* is affected by the organization's culture

Division of labor

-Divides work tasks into specific parts. -Efficient use the specialized skills of the individual. -The professional may become narrow and job may become boring.

Executive summary

-First page or 2, this is what you *use to sell plan* -Should be short, but hit main points of the proposal -*Capture attention* of the reader -Should begin with a *table of contents*

Goals

-Goals are the articulations of *values*. -Should not be set at odds with the core values of the organization

Planning Phase

-Ideas are actively generated for the pharmacy organization -A group effort involving all levels of the organization -Identify and select preferred strategies that will accomplish the goals

Structure

-In order to make the goals of the organization a reality, a structure must be put in place to make the organization operational -Includes concepts as reporting relationships, communication patterns, decision-making procedures, responsibility/accountability, norms and reward structures

Operational structure and processes

-It describes how the program will be run. -Document how the service will be provided and by whom -Should describe how the customers will interface with the program -Also include definitions of the regulatory, clinical, and quality requirements that may be applicable to the business

External Environment

-Organizations exist in an environment that is constantly in flux. -Organizations should be professional to cope with the unexpected

Market analysis and strategy

-Part of situation analysis. -Market analysis is *carried out during planning* -Marketing strategy is a part of goal-setting and strategy-development elements of planning

*Vertical Differentiation*

-Refers to the depth of the organizational hierarchy -One key feature of an organization is the chain of command, or the number of levels between the owner or president of the organization and the staff

Conclusion

-Should be short -Quickly *summarize* the document -It should provide a *recommendation* with respect to the proposed business decision

Climate

-Structure produces the climate or the psychological atmosphere of the organization. -Consists of factors such as the amount of trust, the level of morale, and support employees experience. -Often confused with *organization culture*

*Vision Statement*

-The *vision* is what the pharmacy organization wants to be at some future point of time -The *vision statement* should make people think and should motivate people to strive for something greater

Unity of command

-The concept that an individual reports to only one supervisor to whom he is responsible. -In *decentralized* pharmacies employees have more than one person to whom they are reporting.

*Operational planning*

-The process of mapping out the actions necessary to accomplish short-term objectives -Focuses on determining the day-to-day activities that are necessary to achieve the long-term goals of the organization -*Know the difference between operational and strategic planning*

Supportive documents

-These include tables, figures, financial statements, and/or letters of support -Sometimes may be important as a written document

Background and description

-Think: How will this benefit the business? -In a logical sequence, the plan should define the rationale for the program or services

*Organizational Chart Example*

1. *Solid lines* represent direct reporting relationships important to the overall objectives of the organization (line authority), these include vice presidents, directors, managers 2. *Dashed lines* represent advisory positions (staff authority); these include chief personnel officer or vice president of personal, finance, legal, real estate, information systems, etc

Postplanning Phase: Three vitally important steps

1. Communicating the plan 2. Implementing the plan 3. Monitoring progress once the plan is implemented

The general steps in planning process include:

1. Define or orient the planning process to a singular purpose or a desired result (vision/mission) 2. Assess the current situation 3. Establish goals 4. Identify strategies to reach those goals 5. Establish objectives that support progress toward goals 6. Define responsibilities and timeliness for each objective: (when in a working environment..assign responsibilities to certain individuals) 7. Write and communicate the plan 8. Monitor progress toward meeting goals and objectives

Three major aspects of the structure of an organization:

1. Differentiation 2. Formalization 3. Centralization

Other factors

1. Division of labor 2. Unity of command 3. Span of control 4. Departmentalization

Barriers of effective planning

1. Failure to commit sufficient time to the planning effort 2. Interpersonal issues such as struggles over power or politics and individual or group resistance to change 3. Lack of planning skills 4. Failure to plan far enough into the future 5. Constantly changing environment 6. Failure to implement due to lack of time or lack of resources 7. Failure to monitor progress 8. *Lack of support of top executive and/or board of directors*

Limitations of planning

1. Guesswork (likelihood of events) 2. The quality of the data 3. Inadequate action (limitation: static and unyielding plan)

Assessing Organizational Culture: Four types of culture based on *control* (high/low) and *focus* (internal/external)

1. Hierarchical (high/internal) 2. Group (low/internal) 3. Rational (high/external) 4. Developmental (low/external)

*Differentiation: 3 types*

1. Horizontal 2. Vertical 3. Spatial

Process of strategic planning:

1. Preplanning Phase 2. Planning Phase 3. Postplanning Phase

Formalization

1. Presence of rules 2. Procedural specifications 3. Technical competence 4. Impersonality

Organizational behavior draws on a number of different behavioral science disciplines:

1. Psychology 2. Sociology 3. Social Psychology 4. Anthropology 5. Political Science

Personnel can be:

1. Staff: ward clerk, cashier, technician, pharmacist, nurse, or physician. 2. Management and Administrators: owner, president, vice president, manager, director or supervisor

SWOT Analysis

1. Strengths and weaknesses 2. External opportunities and threats

Elements suggested in developing a mission statement for a community pharmacy:

1. The intended (or target) customers 2. The core values of the pharmacy 3. The key services and products provided by the pharmacy 4. The benefits incurred by the customers 5. Desired public image of the pharmacy

Summary of key elements of strategic planning: VSGOT

1. The organization's *v*ision 2. *S*trategies 3. *G*oals for each strategy 4. *O*bjectives required to meet those goals 5. *T*asks or action plans to complete the objectives

Why is organizational behavior important in pharmacy practice?

1. Was not important in the *earlier times* for the pharmacists. 2. Required because of *changing roles* of pharmacist over time. 3. Shift from an independent practitioner to salaried employee. 4. The major distinction between profession and an occupation lies in legitimate organized autonomy — *a profession is distinct from other occupations in that it has been given the right to control its work*

The time horizon for strategic planning may be as long as _____ years or as short as _____ years

10-20, 2

Organization

A group of individuals working to reach some common goal

Milestones, schedule, and action plan

A timeline should be defined that includes major *accomplishments* and *goals* of the program for implementation and through 3-5 years; may also include long-range growth and expansion objectives

*Horizontal differentiation*

Describes the degree of differentiation based on how many different types of either people or units are included in the organization

Proactive planning

Enables an organization to control its environment instead of vice versa

Social Psychology

Focuses on the influence of individuals on one another and helps understanding communication patterns, attitude change and group functioning

Anthropology

Helps in understanding of the environment in which the organization functions

Sociology

Helps us understand how individuals fulfill their roles within a larger system through organizational structures, behavioral norms and bureaucracies.

Situation analysis

Identify where, what and how the organization is in the present.

Planning

In the broadest sense represents the purposeful efforts taken by an organization

Unity of command: Matrix Organization

Integrates the activities of different specialties while maintaining specialized organizational departments -Works well in environments that are continually changing and in need of innovation. -Suited for pharmaceutical manufacturers and cross-disciplinary teams in health system. -Sometimes may lead to *confusion* as to who is responsible for what can develop

*Authority*

Is the rights given to a certain position in an organization to give orders and the expectation that these orders are carried out

Organizational behavior

Is the systematic and scientific analysis of individuals, groups, and organizations; its purpose is to understand, predict, and affect human behavior to improve the performance of individuals that ultimately affects the effectiveness and functioning of the organizations in which they work

Psychology

Allows understanding individual behavior and focuses on aspects as motivation, job satisfaction, attitude measurement, and work design.

Exit strategy is also referred to as what?

Contingency strategy

Exit strategy

Plan should include issues such as what to do with existing patients and customers, staff and how the equipment and resources may be disposed off

Critical risks and opportunities

Plan should outline the major strengths and weakness of the proposed business and describe the opportunities and risk associated with the program if implemented -Present both positive and negative information in an *unbiased manner*

SWOT Analysis: Strengths and weaknesses

Profitability, quality of pharmacy service, customer service, competence and ability of pharmacy staff, and the efficiency of the pharmacy operations

*A hospital pharmacy that has satellite pharmacies located throughout the hospital are often considered decentralized. This decentralization could be in location ONLY if the decision making is in one _____.*

centralized point

*Spatial Differentiation can also occur when different _____ are located in different areas.*

departments

*Differentiation refers to the degree to which units are _____.*

dissimilar

*The smaller the size of the organization, the _____ is the number of positions needed to support the line authority*

fewer

Background and description: The *service opportunity* provides the reader with a picture of the purpose of the proposed program and should lead directly to a description of the _____.

formal mission of the business

Organizational chart is one type of _____.

formalization

Apart from knowing *technical and professional aspects* it is important to understand how organizations _____ and how people within them work.

function

*Spatial differentiation is also related to the amount of _____ and _____ differentiation.*

horizontal, vertical

Individuals higher in organizations will have _____ formal job descriptions than those lower in the company.

less

Positions may have a detailed job description while in some organizations it may be _____.

less formal

Strategic planning is also described as _____.

long-term planning

*Horizontal Differentiation: Can also take in the form of _____ of a variety of related industries. For example a health system can own several hospitals, long-term care facilities, and a managed-care business.*

multi-ownership

Preplanning should define the _____ of the planning efforts and the _____ that will be used to accomplish those objectives

objectives, procedure

Strategic planning can be considered as an effort that enables the _____ of all organizational resources within current and future environmental constraints

optimal deployment

*An _____ depicts the reporting relationships and the hierarchy of authority in an organization*

organizational chart

*Vertical Differentiation is generally represented by an _____.*

organizational chart

"Out of the box" planning may help organizations position themselves not only to control the business environment but also to create or recreate the business environment. It is used when something comes up that wasn't _____.

planned

*Centralization: Usually the very top levels of management make most of the_____.*

policy decisions

*Centralization: Decision making and authority in this context refer to the rights inherent to the _____ that one holds in the organization*

position

Professional allegiance might be to the _____ not the employer

profession

Pharmacy and medicine are _____ occupations.

professional

*Centralization is sometimes confused with _____.*

spatial differentiation

The planning phase is also referred to as _____.

strategizing

*In an organizational chart which way does authority usually flow?*

top to bottom

*Horizontal Differentiation: In case of pharmacy, coordinating the work among people in the different units can be more difficult since all the people do not have the same _____ and _____.*

training, education