The current organizational structure is considered to be functional. Senior management has put forth a recommendation to change the structure to another type to stop the loss of revenue. The options being considered are: divisional, matrix, and flatarchy. You are a consultant that has been brought in to evaluate these options. You will prepare a memorandum that discusses the each option and includes your recommendation. In your memorandum, list the type of structure (include the current one) with a brief definition. Identify the pros and cons of each one. Then make a recommendation on which option the organization change to if any. Also, address how this change in structure would impact the strategic planning activities of the organization.

QUESTION

According to one source, a functional structure organizes activities around the mission-critical activities or process of the organization (Ginter, Duncan, & Swayne, 2010). This is very fitting for a healthcare organization. We often group our departments by services. For example, we might have surgery, primary care, nutrition, housekeeping, and emergency room. Each one of these areas has a specific role in the delivery of healthcare. By grouping in this manner, it allows for better management of staff and utilization of resources.  This week’s discussion question explores the various organization structures that would be appropriate for a healthcare organization.

Strayer Transplant Center is part of the SEI Healthcare System. It is a for-profit organization. All of the procedures are performed at the system’s flagship hospital. The organization currently performs more than 750 procedures a year. The center generates over 80 million in revenue each year. However, we have seen a slight decline over the last few years.

The current organizational structure is considered to be functional. Senior management has put forth a recommendation to change the structure to another type to stop the loss of revenue. The options being considered are: divisional, matrix, and flatarchy. You are a consultant that has been brought in to evaluate these options. You will prepare a memorandum that discusses the each option and includes your recommendation. In your memorandum, list the type of structure (include the current one) with a brief definition. Identify the pros and cons of each one. Then make a recommendation on which option the organization change to if any. Also, address how this change in structure would impact the strategic planning activities of the organization.

ANSWER

Evaluating Organizational Structure Options for a Healthcare Organization: A Consultant’s Perspective

Introduction

Organizational structure plays a crucial role in shaping the operations and success of any healthcare organization. In light of the decline in revenue at Strayer Transplant Center, senior management is seeking a consultant’s evaluation of alternative organizational structures. This essay explores the functional structure, as well as the divisional, matrix, and flatarchy structures, analyzing their pros and cons. Based on this evaluation, a recommendation will be made to determine the most suitable organizational structure for Strayer Transplant Center’s future success.

The Functional Structure

The current functional structure at Strayer Transplant Center organizes departments based on services such as surgery, primary care, nutrition, housekeeping, and the emergency room. This arrangement allows for efficient management of staff and resource utilization. However, it may no longer effectively support the organization’s financial goals.

Pros of Functional Structure:

Clear specialization and focus within departments.

Efficient use of resources within each function.

Easy coordination and communication within departments.

Cons of Functional Structure:

Limited cross-functional collaboration and coordination.

Siloed decision-making, hindering adaptability and innovation.

Potential for duplication of efforts and inefficiencies.

The Divisional Structure (Recommended)

A divisional structure, where Strayer Transplant Center would be organized into divisions based on market segments or services, is recommended as a potential replacement for the functional structure (Raghu & Rodrigues, 2021). Each division would have its own functions and operate autonomously, fostering flexibility and responsiveness to specific needs.

Pros of Divisional Structure:

Enhanced focus on market segments or services, promoting tailored strategies.

Improved decision-making at the division level, fostering adaptability.

Increased accountability and responsibility within each division.

Cons of Divisional Structure:

Potential duplication of resources across divisions.

Challenges in maintaining consistency and standardization across divisions.

Higher coordination and communication requirements between divisions.

The Matrix Structure

The matrix structure combines functional and divisional structures, creating a dual reporting system. It facilitates collaboration and coordination across different functions and divisions through cross-functional teams. This structure could be suitable for organizations seeking to maintain functional expertise while promoting collaboration.

Pros of Matrix Structure:

Enhanced cross-functional collaboration and information sharing.

Efficient use of specialized skills across functions.

Flexibility in responding to complex and dynamic challenges.

Cons of Matrix Structure:

Potential for role ambiguity and conflict due to dual reporting.

Increased complexity in decision-making processes.

Time-consuming coordination and communication requirements.

The Flatarchy Structure

A flatarchy structure decentralizes decision-making and minimizes hierarchy. It empowers employees at all levels to make independent decisions, fostering innovation and creativity. However, it may pose challenges in maintaining coordination and control.

Pros of Flatarchy Structure:

Rapid decision-making and adaptability.

Empowerment and engagement of employees.

Encouragement of innovation and entrepreneurial spirit.

Cons of Flatarchy Structure:

Potential for lack of coordination and direction.

Challenges in maintaining accountability and control.

Limited support for standardized processes and procedures.

Recommendation

After a comprehensive evaluation, it is recommended that Strayer Transplant Center adopts a divisional structure as a potential replacement for the functional structure. This change would provide the necessary flexibility and focus to address the organization’s decline in revenue (Tulchinsky, 2014). Each division can tailor strategies to specific market segments or services, enhancing accountability and ultimately improving financial performance.

Impact on Strategic Planning

The transition to a divisional structure would significantly impact the strategic planning activities of Strayer Transplant Center. With divisions operating autonomously, strategic planning efforts can be targeted and aligned with the unique needs and opportunities within each division. This change fosters innovation, adaptability, and accountability (Francis, 2018). Effective communication and coordination mechanisms between divisions are vital to maintaining overall organizational cohesion and alignment with overarching strategic goals.

Conclusion

The evaluation of organizational structure options for Strayer Transplant Center highlights the potential of transitioning from a functional to a divisional structure to address the decline in revenue. The recommended divisional structure offers the necessary flexibility, focus, and accountability for long-term success. By embracing this change, Strayer Transplant Center can embark on a strategic and adaptive path, positioning itself as a thriving healthcare organization in the future.

In conclusion, a well-designed organizational structure is essential for the success of healthcare organizations. Through careful evaluation and consideration, organizations can choose the structure that best aligns with their goals and enables them to thrive in a rapidly changing healthcare landscape.

References

Francis, A. (2018, July 27). The Effect of Organizational Structure on Innovation – MBA Knowledge Base. MBA Knowledge Base. https://www.mbaknol.com/management-concepts/the-effect-of-organizational-structure-on-innovation/ 

Raghu, S. J., & Rodrigues, L. L. R. (2021). A concept of solid waste management behaviour in India: A solution towards environmental sustainabiity. ResearchGate. https://www.researchgate.net/publication/355170339_A_concept_of_solid_waste_management_behaviour_in_India_A_solution_towards_environmental_sustainabiity 

Tulchinsky, T. H. (2014). Planning and Managing Health Systems. In Elsevier eBooks (pp. 613–641). https://doi.org/10.1016/b978-0-12-415766-8.00012-4