Our readings this week focused on organization design and some compared the qualities of organizations that are built-to-change versus organizations that are not (Worley & Lawler, 2006).
I interviewed an employee with a local hospital in Suffolk, Virginia. Five years ago this hospital was bought out by a much larger hospital chain. There are dynamics in the situation that I thought were especially relevant to this week’s readings - the employee had been with the hospital for 20 years before the buyout and had worked with the same core staff in her department for the same amount of time.
I was curious as to how their department compared with other departments in the same hospital and how the hospital survived the change (i.e. was the hospital a built-to-change organization as discussed by Worley and Lawler). I will use the Star Model frame work to evaluate the organizational structure and determine whether this specific component changed during the transition (Galbraith, 2011).
The strategy for the organization remained the same - providing quality health care. The local hospital was unable to continue providing health care at the necessary quality because of costs. The organization that bought them out was significantly larger and had greater buying power for the new equipment that was necessary.
The structure of the organization also remained somewhat the same during the transition. The leadership at the hospital remained the same, but there was a greater authority that the hospital as a whole was now responsible to.
The processes in the organization saw significant change during the transition. Changes included the merger of some departments with the larger organization (e.g. billing, technology) and an increased focus on inter-departmental cooperation.
There were several interesting components to the people component. First, some departments experienced significant turnover during this time. Second, there was additional training, monitoring and accountability for all employees. Training opportunities were provided via online modules versus live group trainings and mandatory training requirements were increased. Additionally, departments are now provided with a biweekly productivity statement to determine if the department is meeting productivity goals. Finally, individual workers are tracked via the management system to ensure they are meeting their productivity goals. The latter two changes are significant because it means that every member of the team must contribute towards the goal. The employee noted a significant difference in the “caring of the individual employee” with the new corporation. She said that while the hospital is still customer service oriented, they must be so while also being conscious about costs and productivity.
The rewards also changed with the merger. A new pay plan was implemented that caused almost every employee to receive a raise. In addition, the generous retirement plan used by the local hospital was adopted by the larger corporation so all employees within the organization now enjoy a better retirement benefit (while those who were originally with the local hospital retained the same benefit).
The most interesting component of my discussion with the employee was the lack of turnover for their department (most have been there for 20 years) compared to the remainder of the hospital (average turnover is 5 years). When asked why this is, the employee responded that the department is a small group which interacts more than other departments do, adding that they are team oriented and are always looking out for each other. This says to me that the team brings a human relations component to the department that is missing from the larger organization. The “caring of the individual” that is lacked by the corporation is found within the confines of the department.
In conclusion, it is hard to tell based on this employee’s perspective whether the hospital as a whole is built for change. I believe the department this employee works in, however, does have the necessary requirements to adapt and change within the framework of the larger organization.
References
Galbraith, J. (2011) The Star Model, 1-6.Worley, C. & Lawler, E. (2006) Designing Organizations That are Built to Change. MIT Sloan Management Review, 48 (1), 19-23.
Hi Brenda,
ReplyDeleteI really enjoyed reading this. What I found most interesting is that the new corporation was able to keep the original mission of providing quality healthcare while adding extremely positive employee focused elements like training, benefits, a pay raise and interdepartmental cooperation. Yes, it would seem the new corporation followed Galbraith's Star Model to the letter.
I'm wondering if the early significant turnover happened by employee choice, or if the corporation "cleaned house." Did the corporation downsize at all, or replace those who left either on their own accord by other measures?
It would seem the new corporation did a great job of meeting all the human needs outlined by Morgan. " Self-actualizing, Ego, Social, Security and psychological" (1998) while still maintain strong organizational structure. They truthfully met two extremely important goals.
1. Maintaining quality health care
2. "Caring of the individual employee"
Thank you for sharing. This hospital sound like a great place to work.
Lisa,
DeleteInsightful comment! The corporations did not clean house. The interviewee made a point to mention that the new company wanted to keep all of the former employees. The only people slightly affected were departments that were moved to the main office (about an hour away). Examples she mentioned were finance and technology. She said they received several months notice that they would need to move or were given the choice to find a different job at the current location, depending on their skills.
I agree with your comment about the new corporation meeting Maslow's hierarchy of needs. I asked the employee if she felt the merger was successful and she responded with yes. Over the course of the conversation, I felt like the most successful component of the merger was the new company recognizing the human component within the organization and meeting their needs.
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ReplyDeleteNice post, Brenda. What did your interviewee think about the merger? Was it successful in her eyes? Alignment is key to the Star Model, and I wonder if all of these policies are interacting harmoniously with one another.
ReplyDeleteWhen you write about the processes of the organization, I think you are talking more about structure. I like to think of structure as the organizational chart, and because they merged departments, the layout of the organization no doubt changed. Process, on the other hand, is how the organization functions (like you said, cooperation, allocation of resources, etc).
Courtney,
DeleteThe interviewee did say that the merger was successful, but added that there were a few employees who would not agree. When I asked why she thought for several minutes and said that the new accountability components were probably what bothered them most (at least the ones that she knew and worked with). These people were no longer able to ride the coattails of their co-workers due to the regular monitoring of department, and individual employee, productivity. It pushed them out of their comfort zone.
You're right - I should have been broader in my thinking when analyzing the interview and noted that the revised processes were likely due to a new structure and a slightly different management strategy.
Hi Brenda,
ReplyDeleteI really liked your post. It gives one enough information to work from. When I first read the post, I immediately thought of one the “hybrid forms” outlined by Lorsch (1975) when he states that “most large corporations do not have either a pure functional structure or a pure divisional structure” (Lorsch, 1975, p.5). In this case, some of the functions were centralized as you mention but it seems like the hospital still retained some autonomy which I think is ideal during a major transition.
One of the points you make was about how the pay system and retirement plans were restructured made me think about the “rewards program” shared by Worley & Lawler (2006), but if I remember correctly, they were more focused on pay for performance than on increasing rewards for everyone. But I guess they do make a point that during transition or “periods of change” bonuses can be used as incentives. Also, the turnover rate might seem high, especially for specialized fields, but I live in a place (Silicon Valley) where you normally do not stay with a company longer than 3 years, so everything is relative. What department does your interviewee work in? It would be interesting to do a survey and find out why people tend to leave after 5 years – is it the overload on metrics and performance management? Or the lack of communication with other departments? The findings can inform management to “restructure” some things to keep employees or at least make them feel like they “care about them”.
Adriana