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.
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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.
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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
Subject: Evaluation and Recommendation for Organizational Structure Change in Strayer Transplant Center
Dear Senior Management,
As a consultant entrusted with evaluating the organizational structure of Strayer Transplant Center within the SEI Healthcare System, I have thoroughly examined the current functional structure and explored alternative options, namely divisional, matrix, and flatarchy. The purpose of this memorandum is to present a comprehensive analysis of each structure, including their definitions, advantages, disadvantages, and my recommendation for the organization’s optimal choice.
Functional Structure (Current)
The functional structure organizes activities based on mission-critical processes or departments within the organization. In the case of Strayer Transplant Center, departments such as surgery, primary care, nutrition, housekeeping, and emergency room are grouped together to ensure efficient management of staff and resource utilization. This structure aligns well with healthcare organizations due to their specialized and departmentalized nature.
Pros
Clear specialization and focus on functional areas, leading to expertise development.
Efficient use of resources and economies of scale within each department.
Streamlined communication and coordination within functional units.
Clear career paths and hierarchical structure for employees.
Cons
Limited cross-functional collaboration and coordination.
Decentralized decision-making, potentially resulting in silos and lack of innovation.
Difficulty in adapting to changes or new market demands.
Potential duplication of resources and efforts across departments.
Divisional Structure
The divisional structure organizes activities around distinct divisions or product lines. Each division operates as a self-contained entity with its own functional departments such as marketing, finance, and operations, allowing for greater autonomy and focus on specific markets or customer segments.
Pros
Enhanced flexibility and responsiveness to market changes.
Strong customer or patient focus within each division.
Improved coordination and integration across functions within divisions.
Encourages innovation and entrepreneurial spirit.
Cons
Potential duplication of resources and functions across divisions.
Increased complexity in coordinating activities across divisions.
Limited sharing of expertise and best practices across divisions.
Possibility of interdivisional competition and conflicts.
Matrix Structure
The matrix structure combines functional and divisional structures, creating dual reporting lines for employees. Individuals are assigned to cross-functional teams or projects while maintaining their functional department affiliations. This structure facilitates both vertical and horizontal communication and collaboration.
Pros
Efficient allocation of resources by sharing personnel across projects or divisions.
Enhanced coordination and collaboration between functions and divisions.
Promotes flexibility, adaptability, and innovation.
Facilitates effective use of specialized skills and knowledge.
Cons
Complex reporting relationships and potential conflicts.
Increased need for coordination and communication.
Potential for power struggles and ambiguity in decision-making.
Requires strong leadership and interpersonal skills to manage conflicts.
Flatarcy Structure
The flatarchy structure is characterized by a decentralized, non-hierarchical approach, allowing for greater employee empowerment and collaboration. It encourages cross-functional collaboration, self-management, and a shared sense of responsibility.
Pros
Quick decision-making and response to changes.
Promotes employee engagement, autonomy, and creativity.
Encourages innovation and the sharing of diverse perspectives.
Streamlined communication and reduced bureaucracy.
Cons
Potential lack of clear authority and accountability.
Difficulty in maintaining consistency and alignment across the organization.
Requires strong interpersonal skills and self-discipline.
Potential for role ambiguity and conflicts.
Recommendation
After evaluating the options, I recommend that Strayer Transplant Center transition from the current functional structure to a matrix structure. This transition will leverage the benefits of cross-functional collaboration and coordination while maintaining the specialization and expertise of functional departments. The matrix structure will enable the organization to address the decline in revenue and enhance overall performance.
The matrix structure will facilitate efficient resource allocation, allowing staff to work on projects or initiatives that require their expertise across departments. It will foster collaboration, innovation, and knowledge sharing, leading to enhanced patient care and improved outcomes. However, implementing a matrix structure requires careful planning, effective communication, and training to manage potential challenges associated with dual reporting lines and coordination.
Impact on Strategic Planning
The change in organizational structure will have a significant impact on strategic planning activities. The matrix structure will enable a more agile and responsive approach to strategic planning by incorporating input from various functional areas and divisions. It will encourage cross-functional collaboration in identifying strategic priorities, evaluating market opportunities, and adapting to changes in the healthcare landscape. The matrix structure will facilitate the integration of diverse perspectives and expertise, leading to more robust and effective strategic decisions.
In conclusion, transitioning from the current functional structure to a matrix structure is recommended for Strayer Transplant Center. This change will provide the necessary flexibility, collaboration, and innovation required to address the decline in revenue and ensure the organization’s long-term success. It is vital to develop a comprehensive implementation plan, including clear communication, training, and performance measurement systems, to facilitate a smooth transition and maximize the benefits of the new structure.
Should you require further clarification or assistance, please do not hesitate to contact me. I am committed to supporting Strayer Transplant Center in achieving its goals and maintaining excellence in healthcare delivery.
Sincerely,
[Your Name]
[Consultant]
