Introduction to US Health CareIntroduction to US Health Care

Chapter 1Chapter 1

The U.S. Health The U.S. Health Care SystemCare System

Health Care ExpendituresHealth Care Expenditures

Investment

Government Expenses

Retail Sales of Medical Products

Nursing Home and Home Health Care

Professional Services

US Health Care Industry

2007 National Health Care2007 National Health Care

Expenditures Expenditures (projected)(projected)

$192.1$297.9

$154.4$297.9 $729.6

ProfessionalServices

Nursing Homeand HomeHealthRetail Sales ofMedicalProductsGovernmentExpenses

Investment

*values represent billions of dollars

Types of HCOsTypes of HCOs

PrivatePrivate

Services consumed by Services consumed by individualsindividuals

Enhance and protect Enhance and protect health of the health of the individualindividual

PublicPublic

Services targeted Services targeted towards health and towards health and wellbeing of wellbeing of populationspopulations or or communitiescommunities

Horizontal SystemsHorizontal Systems Vertical SystemsVertical Systems Combined SystemCombined System

Types of Healthcare SystemsTypes of Healthcare Systems

• Ownership

• Affiliation

• Contracts

• Joint venture

• Lease

Genetic flawsGenetic flaws Progressive biological breakdownProgressive biological breakdown External agentsExternal agents TraumaTrauma Personal habitsPersonal habits Other factorsOther factors

Causes of DiseaseCauses of Disease

Indicators of Public HealthIndicators of Public Health

1.1. Infant Mortality RateInfant Mortality Rate

2.2. Cause of DeathCause of Death

3.3. Population with Chronic Health ConditionsPopulation with Chronic Health Conditions

Factors Affecting UtilizationFactors Affecting Utilization

•Age•Insurance Coverage•Race/ethnicity•Number of Providers•Education Level•Referral Patterns•Income Level•Attitudes and Beliefs

Roles:Roles: Assessing needsAssessing needs Evaluating medical service deliveryEvaluating medical service delivery Factors affecting health care access and Factors affecting health care access and

deliverydelivery

Health ServicesHealth Services Administration Research Administration Research

Health Care Industry SectorsHealth Care Industry Sectors

FinancingFinancing Institutional ProviderInstitutional Provider Individual ProviderIndividual Provider Public Health AgenciesPublic Health Agencies EnablersEnablers RegulatorsRegulators

The Balanced Budget ActThe Balanced Budget Act

The Balanced Budget Act of 1997 and The Balanced Budget Act of 1997 and various (PPS) regulations has resulted various (PPS) regulations has resulted in significant cuts in capital in significant cuts in capital expenditures, teaching programs and expenditures, teaching programs and outpatient services in the form of outpatient services in the form of Ambulatory payment classification.Ambulatory payment classification.

Nurse ShortageNurse Shortage

Faced with a shortage of nurses whose Faced with a shortage of nurses whose expertise and assistance are crucial to high-expertise and assistance are crucial to high-quality healthcare, healthcare providers quality healthcare, healthcare providers have attempted to guard against closing have attempted to guard against closing patient care units and clinics by training patient care units and clinics by training other staff to perform many of the non-other staff to perform many of the non-regulated functions previously performed by regulated functions previously performed by nurses.nurses.

MergingMerging

To pool labor, clinical, and capital resources To pool labor, clinical, and capital resources and expertise many facilities are merging and expertise many facilities are merging with nearby hospitals, prior competitors, or with nearby hospitals, prior competitors, or other strategically located facilities to allow other strategically located facilities to allow them to benefit from the larger merged them to benefit from the larger merged entity.entity.

The Supervisor’s JobThe Supervisor’s Job

Four major areas of responsibility.Four major areas of responsibility.

1) Be a good boss, a good manager, and a team leader of the 1) Be a good boss, a good manager, and a team leader of the employees in the unit.employees in the unit.

2) Be a competent subordinate to the next higher manager2) Be a competent subordinate to the next higher manager

3) Act a connecting link between the administration and the 3) Act a connecting link between the administration and the employees.employees.

4) Must maintain satisfactory working relationships with the heads, 4) Must maintain satisfactory working relationships with the heads, leaders, and peer supervisors of all other departments and services.leaders, and peer supervisors of all other departments and services.

The Manager’s RoleThe Manager’s Role

Managers must implement the changes Managers must implement the changes created or resulting from the environmental created or resulting from the environmental dynamics.dynamics.

Managing: The process of acquiring and Managing: The process of acquiring and combining resources to accomplish goals.combining resources to accomplish goals.

57% of healthcare expenditures are for 57% of healthcare expenditures are for wages and benefits (wages and benefits (PriceWaterhouseCoopers 2005PriceWaterhouseCoopers 2005).).

Story time-The Good BossStory time-The Good Boss

When you become a healthcare manager When you become a healthcare manager how will you ensure that fulfilling your four how will you ensure that fulfilling your four areas of responsibility?areas of responsibility?

The Healthcare PerspectiveThe Healthcare Perspective

Dynamically changing environment:Dynamically changing environment:• Healthcare going to the patientHealthcare going to the patient• Increased managed careIncreased managed care• Reimbursement changesReimbursement changes• Increased regulationIncreased regulation• Advancing technologyAdvancing technology• Shortage of some healthcare professionalsShortage of some healthcare professionals• Mergers and closuresMergers and closures• How care is deliveredHow care is delivered

Three Essential SkillsThree Essential Skills

Technical Skills: know the work to be doneTechnical Skills: know the work to be done Human Relation Skills: able to work with Human Relation Skills: able to work with

and motivate people and motivate people Conceptual Skills: able to visualize the big Conceptual Skills: able to visualize the big

picture and understand how one department picture and understand how one department or individual fits into itor individual fits into it

Mintzberg’s RolesMintzberg’s Roles

Henry Mintzberg is known worldwide for his Henry Mintzberg is known worldwide for his theories on business and management. One of his theories on business and management. One of his most popular theories is his roles for managers. most popular theories is his roles for managers. These roles define behaviors and traits that certain These roles define behaviors and traits that certain managers possess. He identified ten different managers possess. He identified ten different roles, separated into three categories. The roles, separated into three categories. The categories he defined are interpersonal roles, categories he defined are interpersonal roles, information processing roles, and decision roles information processing roles, and decision roles (“ProvenModels - Ten Managerial Roles”). (“ProvenModels - Ten Managerial Roles”).

Interpersonal RolesInterpersonal Roles

The first set of roles Mintzberg described is interpersonal The first set of roles Mintzberg described is interpersonal roles. The first interpersonal role is a figurehead. A roles. The first interpersonal role is a figurehead. A figurehead is a symbol of his company and performs social, figurehead is a symbol of his company and performs social, inspirational, and ceremonial duties. The next role is a inspirational, and ceremonial duties. The next role is a leader. A leader is one of the most important roles for leader. A leader is one of the most important roles for managers. Leaders provide a proper work atmosphere and managers. Leaders provide a proper work atmosphere and are able to motivate employees. The final interpersonal role are able to motivate employees. The final interpersonal role is a liaison. A liaison is the center for information and is a liaison. A liaison is the center for information and communication networks, and maintains external contacts communication networks, and maintains external contacts to gather information (“Mintzberg: The Managerial Roles”). to gather information (“Mintzberg: The Managerial Roles”).

Information Processing RolesInformation Processing Roles

The next set of roles is called information processing roles. The next set of roles is called information processing roles. The first information processing role is a monitor. A monitor The first information processing role is a monitor. A monitor gathers external as well as internal information relevant to gathers external as well as internal information relevant to the organization. A disseminator brings external views to the organization. A disseminator brings external views to the workplace and transmits factual and value based the workplace and transmits factual and value based information to subordinates. The final information information to subordinates. The final information processing role is a spokesperson. A spokesperson processing role is a spokesperson. A spokesperson informs and lobbies for the company. He provides key informs and lobbies for the company. He provides key stakeholders informed about performance.stakeholders informed about performance.

Decision RolesDecision Roles

The final set of roles is decision roles. Included is The final set of roles is decision roles. Included is the entrepreneur role. This is someone who the entrepreneur role. This is someone who designs and initiates change in an organization. designs and initiates change in an organization. There is the disturbance handler, who deals with There is the disturbance handler, who deals with unexpected disturbances to the organization. Next unexpected disturbances to the organization. Next is the resource allocator, who keeps track of is the resource allocator, who keeps track of resources and authorizes there use. The final role resources and authorizes there use. The final role Mintzberg described is a negotiator. A negotiator Mintzberg described is a negotiator. A negotiator participates in negotiations with people and participates in negotiations with people and outside organizations.outside organizations.

Supervisor’s RoleSupervisor’s Role

Often considered the most difficultOften considered the most difficult Must keep abreast of technological Must keep abreast of technological

changeschanges Requires three essential skills:Requires three essential skills:

1.1. Technical skillsTechnical skills

2.2. Human relation skillsHuman relation skills

3.3. Conceptual skillsConceptual skills

ManagementManagement

The process of getting things done through and The process of getting things done through and with people by directing and motivating the efforts with people by directing and motivating the efforts of the individuals toward common objectives.of the individuals toward common objectives.

Providing a climate conducive for employees to Providing a climate conducive for employees to achieve, to be recognized, and to have achieve, to be recognized, and to have companionship.companionship.

Same definition applies to managers in any Same definition applies to managers in any environment.environment.

Story Time-TrainingStory Time-Training

How do we train our employees to fill all How do we train our employees to fill all these vital roles and have these vital traits?these vital roles and have these vital traits?

Managerial Functions Managerial Functions

The functions which describe managerial The functions which describe managerial job, when put together, make up the job, when put together, make up the management process. This process is management process. This process is analyzed into key functions of management. analyzed into key functions of management. As all functions are not equally important for As all functions are not equally important for all managers, time spent by them for each of all managers, time spent by them for each of these functions varies according to their these functions varies according to their levels in the organization. levels in the organization.

PlanningPlanning

1.1. PLANNINGPLANNING: PLANNING REFERS TO : PLANNING REFERS TO ANTICIPATE THE OPPORTUNITY, ANTICIPATE THE OPPORTUNITY,

PROBLEMS AND CONDITIONS AND PROBLEMS AND CONDITIONS AND CHOOSING FROM AMONG THE CHOOSING FROM AMONG THE

ALTERNATIVE FUTURE COURSES OF ALTERNATIVE FUTURE COURSES OF ACTION. THE PLANNING PROCESS ACTION. THE PLANNING PROCESS

GENERALLY INCLUDES THE GENERALLY INCLUDES THE FOLLOWING ACTIVITIES.FOLLOWING ACTIVITIES.

ForecastingForecasting

THE PLANNING PROCESS GENERALLYTHE PLANNING PROCESS GENERALLY

INCLUDES THE FOLLOWING ACTIVITIES.INCLUDES THE FOLLOWING ACTIVITIES.

FORECASTING FORECASTING IS LOOKING AHEAD TO IS LOOKING AHEAD TO ANTICIPATE THE OPPORTUNITY, PROBLEMS ANTICIPATE THE OPPORTUNITY, PROBLEMS AND CONDITIONS IN A FUTURE PERIOD OF AND CONDITIONS IN A FUTURE PERIOD OF TIME.TIME.

Establishing ObjectivesEstablishing Objectives

ESTABLISHING OBJECTIVESESTABLISHING OBJECTIVES MEANS MEANS SETTING THE END RESULTS TO BE SETTING THE END RESULTS TO BE ACCOMPLISHED BY DIRECTING ACCOMPLISHED BY DIRECTING ORGANIZATIONAL EFFORTS.ORGANIZATIONAL EFFORTS.

ProgrammingProgramming

PROGRAMMING PROGRAMMING IS ESTABLISHING IS ESTABLISHING SEQUENCE AND PRIORITY OF ACTIONS SEQUENCE AND PRIORITY OF ACTIONS TO BE FOLLOWED IN THE ATTAINMENT TO BE FOLLOWED IN THE ATTAINMENT OF THE OBJECTIVES.OF THE OBJECTIVES.

Scheduling and BudgetingScheduling and Budgeting

SCHEDULING SCHEDULING IS DECIDING ON TIME IS DECIDING ON TIME SEQUENCE FOR PROGRAM STEPS.SEQUENCE FOR PROGRAM STEPS.

BUDGETINGBUDGETING IS ALLOCATION OF IS ALLOCATION OF RESOURCES TO MINIMIZE COSTS.RESOURCES TO MINIMIZE COSTS.

ProceduresProcedures

ESTABLISHING PROCEDURES ESTABLISHING PROCEDURES MEANS MEANS DEVELOPING AND APPLYING DEVELOPING AND APPLYING STANDARDIZED METHODS OF STANDARDIZED METHODS OF PERFORMING A SPECIFIC WORK.PERFORMING A SPECIFIC WORK.

PoliciesPolicies

DEVELOPING POLICIESDEVELOPING POLICIES INVOLVE INVOLVE ESTABLISHMENT AND ESTABLISHMENT AND INTERPRETATION OF STANDING INTERPRETATION OF STANDING DECISIONS THAT APPLY TO REPETITIVE DECISIONS THAT APPLY TO REPETITIVE QUESTIONS AND PROBLEMS OF QUESTIONS AND PROBLEMS OF SIGNIFICANCE TO BE SIGNIFICANCE TO BE ORGANIZATIONORGANIZATION AS A WHOLE.AS A WHOLE.

Story time- DecisionsStory time- Decisions

As a Healthcare Manager how will I decide As a Healthcare Manager how will I decide which problems deserve the attention of the which problems deserve the attention of the complete planning process?complete planning process?

Organizing FunctionOrganizing Function

ORGANIZING FUNCTIONORGANIZING FUNCTION: THE ORGANIZING : THE ORGANIZING FUNCTION OF MANAGEMENT IS THE FUNCTION OF MANAGEMENT IS THE PROCESS OF DEFINING AND GROUPING OF PROCESS OF DEFINING AND GROUPING OF ACTIVITIES AND CREATING AUTHORITY ACTIVITIES AND CREATING AUTHORITY RELATIONSHIP AMONG THEM. IT CONSISTS RELATIONSHIP AMONG THEM. IT CONSISTS OFOF

– DEVELOPING THE ORGANIZATION STRUCTURE DEVELOPING THE ORGANIZATION STRUCTURE WHICH INVOLVES IDENTIFICATION OF TASK AND WHICH INVOLVES IDENTIFICATION OF TASK AND GROUPING THEM INTO UNITS OR DEPARTMENTS GROUPING THEM INTO UNITS OR DEPARTMENTS FOR FOR PERFORMANCEPERFORMANCE..

DelegatingDelegating

Delegating authority Delegating authority to the managers and to the managers and making them making them responsibleresponsible for group for group performance. performance.

StaffingStaffing

StaffingStaffing: Planning the organization with suitable : Planning the organization with suitable personnel constitutes the staffing function. It personnel constitutes the staffing function. It involves selection, training and development, involves selection, training and development, compensation, and appraisal of subordinates by compensation, and appraisal of subordinates by the manager. Manpower planning and manpower the manager. Manpower planning and manpower management looks after these activities and try to management looks after these activities and try to ensure suitable methods of remuneration and ensure suitable methods of remuneration and performance appraisal of the employees. performance appraisal of the employees.

Directing FunctionDirecting Function

Directing FunctionDirecting Function: involves managing people and the : involves managing people and the work through the means of motivation, proper leadership, work through the means of motivation, proper leadership, effective communication and coordination. A manager must effective communication and coordination. A manager must develop ability to command. He should issue orders and develop ability to command. He should issue orders and instructions without arousing any resentment among the instructions without arousing any resentment among the subordinates. He must be able to secure willing obedience subordinates. He must be able to secure willing obedience from his subordinates without destroying their initiative and from his subordinates without destroying their initiative and creativity. Moreover, it requires a sound creativity. Moreover, it requires a sound communication communication systemsystem to enable exchange of ideas and information for to enable exchange of ideas and information for common understanding. common understanding.

Controlling FunctionsControlling Functions

CONTROLLING FUNCTIONCONTROLLING FUNCTION: ENABLES MANAGEMENT TO : ENABLES MANAGEMENT TO ENSURE THAT ACHIEVEMENT IS IN ACCORDANCE ENSURE THAT ACHIEVEMENT IS IN ACCORDANCE WITH THE ESTABLISHED PLANS IT INVOLVES:WITH THE ESTABLISHED PLANS IT INVOLVES:

ESTABLISHING PERFORMANCE STANDARDS ESTABLISHING PERFORMANCE STANDARDS FOR FOR EVALUATING RESULTS.EVALUATING RESULTS.

PERFORMANCE PERFORMANCE ON THE BASIS OF RECORDS AND ON THE BASIS OF RECORDS AND REPORTS ON THE PROGRESS OF WORK.REPORTS ON THE PROGRESS OF WORK.

PERFORMANCE EVALUATION PERFORMANCE EVALUATION AGAINST THE AGAINST THE STANDARDS SET.STANDARDS SET.

CORRECTIVE ACTION CORRECTIVE ACTION TO REGULATE OPERATIONS, TO REGULATE OPERATIONS, REMOVE DEFICIENCIES AND REMOVE DEFICIENCIES AND IMPROVEIMPROVE PERFORMANCE PERFORMANCE

Story time-Fun FunctionStory time-Fun Function

With all these function and duties the With all these function and duties the manager has to perform how will you relieve manager has to perform how will you relieve your stress?your stress?

Principles of ManagementPrinciples of Management

Henri Fayol, the father of the school of Systematic Henri Fayol, the father of the school of Systematic Management, realized that organizations were becoming Management, realized that organizations were becoming more complex and required their managers to work more more complex and required their managers to work more professionally. His motivation was to create a theoretical professionally. His motivation was to create a theoretical foundation for an educational program for managers who foundation for an educational program for managers who lacked formal training in those days. He developed the lacked formal training in those days. He developed the 'Principles of Management' to help organizations achieve 'Principles of Management' to help organizations achieve optimum performance working toward their goals.optimum performance working toward their goals.

Division of LaborDivision of Labor

1. 1. Division of labor Division of labor achieving the maximum efficiency from labour achieving the maximum efficiency from labour

through specialization across all aspects of through specialization across all aspects of organization (commercial, financial, security, organization (commercial, financial, security, accounting, managerial) rather than just technical accounting, managerial) rather than just technical activities. Fayol did not provide the level of detail activities. Fayol did not provide the level of detail that Taylor's competing Scientific Management that Taylor's competing Scientific Management school prescribed. Scientific Management broke school prescribed. Scientific Management broke individual operational tasks into its basic elements. individual operational tasks into its basic elements. Fayol claimed that division of labor is limited as an Fayol claimed that division of labor is limited as an instrument to achieve optimum performance.instrument to achieve optimum performance.

Establishment of AuthorityEstablishment of Authority

2. 2. Establishment of authority Establishment of authority having the legitimate standing to give orders. having the legitimate standing to give orders.

Authority arises from two sources: official and Authority arises from two sources: official and personal. Experience, intelligence, integrity and personal. Experience, intelligence, integrity and leadership ability are indispensable complements leadership ability are indispensable complements of a manager's official authority. Managers need to of a manager's official authority. Managers need to act knowing that authority and responsibility are act knowing that authority and responsibility are positively correlated.positively correlated.

Enforcement of DisciplineEnforcement of Discipline

3. 3. Enforcement of disciplineEnforcement of discipline upholding discipline is a core activity when upholding discipline is a core activity when

running an organization, although its form running an organization, although its form varies across organizations. Management varies across organizations. Management can sanction employees with warnings, can sanction employees with warnings, penalties, demotions or even dismissals.penalties, demotions or even dismissals.

Unity of CommandUnity of Command

4. 4. Unity of commandUnity of command an employee should receive orders from an employee should receive orders from

one supervisor only. Dual command one supervisor only. Dual command generates tension, confusion and conflict, generates tension, confusion and conflict, and results diluted responsibility and blurred and results diluted responsibility and blurred communication.communication.

Unity of DirectionUnity of Direction

5. 5. Unity of directionUnity of direction a common objective for a group of activities a common objective for a group of activities

is an essential condition to obtaining unity of is an essential condition to obtaining unity of action, coordination of strength and the action, coordination of strength and the focusing of effort.focusing of effort.

The Needs of the WholeThe Needs of the Whole

6. 6. Subordination of individual interest to the Subordination of individual interest to the interests of the organizationinterests of the organization

reconciling general interest with that of the reconciling general interest with that of the group or the individual is one of the greatest group or the individual is one of the greatest problems managers face and applies to the problems managers face and applies to the relationship between staff and supervisor as relationship between staff and supervisor as well. Too often, managers pursue personal well. Too often, managers pursue personal interest rather than the common good.interest rather than the common good.

Show Me The MoneyShow Me The Money

7. 7. Fair remuneration for all Fair remuneration for all Fayol determined compensation for services Fayol determined compensation for services

by considering both financial and non-by considering both financial and non-financial factors and held that employee financial factors and held that employee satisfaction is dependent on the composition satisfaction is dependent on the composition of this mix.of this mix.

Central AuthorityCentral Authority

8. 8. Centralization of control and authorityCentralization of control and authority Fayol choose the 'living organism' as Fayol choose the 'living organism' as

metaphor for an organization when metaphor for an organization when considering centralization versus considering centralization versus decentralization. The level of centralization decentralization. The level of centralization is a matter of proportion as is the division of is a matter of proportion as is the division of labor.labor.

Horizontal CommunicationHorizontal Communication

9. 9. Adoption of a 'scalar chain'Adoption of a 'scalar chain' the chain of supervision that connects the the chain of supervision that connects the

managing director to the lowest ranks. Fayol managing director to the lowest ranks. Fayol combined hierarchy that makes employees aware combined hierarchy that makes employees aware of their place and duties, with an organization's of their place and duties, with an organization's lines of communication. When swift action is lines of communication. When swift action is required, Fayol's grasp of the limitations of the required, Fayol's grasp of the limitations of the formal organization made him propose a system of formal organization made him propose a system of delegated authority that facilitates horizontal delegated authority that facilitates horizontal communication.communication.

Order and PurposeOrder and Purpose

10. 10. A sense of order and purpose A sense of order and purpose a place for everything and everything in its a place for everything and everything in its

place. Facilities must be tidy, materials place. Facilities must be tidy, materials orderly stored and staff selected according orderly stored and staff selected according to strict procedures and clear job to strict procedures and clear job descriptions. Fayol advocated the creation descriptions. Fayol advocated the creation of detailed organizational charts to support of detailed organizational charts to support this Principle.this Principle.

Job StabilityJob Stability

12. 12. Stability of jobs and positionsStability of jobs and positions Fayol viewed personnel planning, Fayol viewed personnel planning,

management development and turnover as management development and turnover as one activity. Both staff and management one activity. Both staff and management require suitable induction periods to require suitable induction periods to familiarise themselves with new work habits familiarise themselves with new work habits and situations.and situations.

InitiativeInitiative

13. 13. Development of individual initiativeDevelopment of individual initiative Initiative is the power to conceive a plan and Initiative is the power to conceive a plan and

ensure its success. Although Fayol regarded ensure its success. Although Fayol regarded management as the first responsible level, management as the first responsible level, he made clear that the Principle extended to he made clear that the Principle extended to all employees through delegated authority.all employees through delegated authority.

  

SpiritSpirit

14. 14. Esprit de CorpsEsprit de Corps building and maintaining staff and building and maintaining staff and

management morale and unity. Fayol management morale and unity. Fayol considered the management style of 'divide considered the management style of 'divide and rule' counter productive. The Principles and rule' counter productive. The Principles can still be used to identify structural flaws can still be used to identify structural flaws and sources of conflict within an and sources of conflict within an organization.organization.

Story time-EmpowermentStory time-Empowerment

How do I get the best from your people?How do I get the best from your people?

ResourcesResources

People (manpower)People (manpower) Materials (supplies, technology)Materials (supplies, technology) Equipment (machinery)Equipment (machinery) InformationInformation Physical plant (facilities)Physical plant (facilities) Funds (money)Funds (money)

PlanningPlanning

Determining in advance what should be done in Determining in advance what should be done in the future.the future.– Establish goals, objectives, policies, procedures, Establish goals, objectives, policies, procedures,

budgets, etc.budgets, etc.– Contemplate and select a course of action from a set of Contemplate and select a course of action from a set of

available alternativesavailable alternatives

Thinking before actingThinking before acting Must come before other managerial functionsMust come before other managerial functions

OrganizingOrganizing

Determining how the work is to be Determining how the work is to be accomplished and arranging resources to accomplished and arranging resources to carry out the plancarry out the plan

Designing a structural frameworkDesigning a structural framework

Organizing ElementsOrganizing Elements

Specialization: A technique used to divide Specialization: A technique used to divide work activities into easily managed taskswork activities into easily managed tasks

Departmentalization: Dividing activities and Departmentalization: Dividing activities and people according to the needs of the people according to the needs of the organization or its customersorganization or its customers

Span of Management: Defining the Span of Management: Defining the optimum number of subordinates a optimum number of subordinates a supervisor can effectively managesupervisor can effectively manage

Organizing ElementsOrganizing Elements

Authority Relationships: Determining who Authority Relationships: Determining who will supervise whom and direct the activities will supervise whom and direct the activities of othersof others

Responsibility: Assigning to individuals an Responsibility: Assigning to individuals an obligation to perform certain dutiesobligation to perform certain duties

Unity of Command: One person–one bossUnity of Command: One person–one boss Line and Staff: Those who direct vs. those Line and Staff: Those who direct vs. those

who advisewho advise

Universality of Managerial Universality of Managerial FunctionsFunctions

All levels of management have the same All levels of management have the same functions.functions.

The depth with which one is consumed with one or The depth with which one is consumed with one or more of the functions may vary depending on the more of the functions may vary depending on the level within the organization.level within the organization.– Long-term planning consumes more of an executive’s Long-term planning consumes more of an executive’s

time; short-term planning consumes more of a front-line time; short-term planning consumes more of a front-line supervisor’s time.supervisor’s time.

AuthorityAuthority

The right to act and to direct othersThe right to act and to direct others Assigned to a position—not an individualAssigned to a position—not an individual Power to impose sanctions if individuals do Power to impose sanctions if individuals do

not follow the directivesnot follow the directives Differs from responsibilityDiffers from responsibility

ResponsibilityResponsibility

Obligation to perform a job or duty or to achieve a Obligation to perform a job or duty or to achieve a certain goal that one has been assignedcertain goal that one has been assigned

May use authority to direct others to assist youMay use authority to direct others to assist you May delegate authority to others so that they can May delegate authority to others so that they can

direct others or use resources to complete the direct others or use resources to complete the work that must be donework that must be done

Cannot delegate responsibility—it remains with the Cannot delegate responsibility—it remains with the person who was originally assigned the goalperson who was originally assigned the goal

Story time-LearningStory time-Learning

What was the most important thing you What was the most important thing you learned from this chapter?learned from this chapter?

ObjectivesObjectives

1.1. Identify the major schools of management Identify the major schools of management theory.theory.

2.2. Discuss the impact of the Industrial Discuss the impact of the Industrial Revolution on management and employee Revolution on management and employee relations.relations.

3.3. Discuss the features and benefits of Discuss the features and benefits of organization development.organization development.

ObjectivesObjectives

4.4. Distinguish among rational authority, Distinguish among rational authority, positional authority, and charismatic positional authority, and charismatic authority.authority.

5.5. Explain the terms Explain the terms organizationorganization, , motionmotion studystudy, , time studytime study, , Hawthorne effectHawthorne effect, and , and methodmethod..

Impact of the Industrial Impact of the Industrial RevolutionRevolution

Provided alternatives to skilled laborProvided alternatives to skilled labor Machines made work more preciseMachines made work more precise In England: machines assisted artisans in In England: machines assisted artisans in

their productiontheir production In the United States: machines allowed In the United States: machines allowed

companies to be more productivecompanies to be more productive

Impact of the Industrial Impact of the Industrial RevolutionRevolution

Changed the manager from owner-worker to Changed the manager from owner-worker to professional managerprofessional manager

In the United States: transition from In the United States: transition from agricultural society to manufacturing stateagricultural society to manufacturing state

Small shops transitioned to factoriesSmall shops transitioned to factories Creation of the Creation of the organizationorganization

Definition: OrganizationDefinition: Organization

Two or more individuals working togetherTwo or more individuals working together A structured, formal environmentA structured, formal environment Working together to achieve a common goalWorking together to achieve a common goal

Schools of ManagementSchools of Management

Classical (1800s–1950s):Classical (1800s–1950s):– Money motivates employeesMoney motivates employees– Focuses on efficiencyFocuses on efficiency– Management’s foundation is bureaucratic, Management’s foundation is bureaucratic,

scientific, and/or administrative in naturescientific, and/or administrative in nature Bureaucratic: relies on a rational set of structured Bureaucratic: relies on a rational set of structured

guidelinesguidelines Scientific: “one best way” to do the jobScientific: “one best way” to do the job Administrative: roles of managementAdministrative: roles of management

Bureaucratic Management Theory Bureaucratic Management Theory (1930–1950)(1930–1950)

Max Weber: Father of Modern SociologyMax Weber: Father of Modern Sociology– Defined three types of authorityDefined three types of authority

Rational authority: based on law, procedures, and Rational authority: based on law, procedures, and rulesrules

Positional authority: placement or structure of the Positional authority: placement or structure of the organization placing a superior over a subordinateorganization placing a superior over a subordinate

Charismatic authority: personal qualities of an Charismatic authority: personal qualities of an individualindividual

Scientific Management Scientific Management (1890–1940) (1890–1940)

Focuses on:Focuses on:– Worker and machine relationshipsWorker and machine relationships– How to organize tasks for peopleHow to organize tasks for people

Assumes that organizational productivity Assumes that organizational productivity would increase by increasing the efficiency would increase by increasing the efficiency of production processesof production processes

Scientific ManagementScientific Management

Theorists:Theorists:– Frederick Taylor—Father of Scientific Frederick Taylor—Father of Scientific

ManagementManagement– Frank Gilbreth—Father of Time and Motion Frank Gilbreth—Father of Time and Motion

StudiesStudies– Lillian Gilbreth—First Lady of EngineeringLillian Gilbreth—First Lady of Engineering– Henry Gantt—created the “Gantt Chart”Henry Gantt—created the “Gantt Chart”

Frederick TaylorFrederick Taylor

Taylor's scientific management consisted of four principles:Taylor's scientific management consisted of four principles: Replace rule-of-thumb work methods with methods based on a Replace rule-of-thumb work methods with methods based on a

scientific study of the tasks. scientific study of the tasks. Scientifically select, train, and develop each employee rather than Scientifically select, train, and develop each employee rather than

passively leaving them to train themselves. passively leaving them to train themselves. Provide "Detailed instruction and supervision of each worker in the Provide "Detailed instruction and supervision of each worker in the

performance of that worker's discrete task" (Montgomery 1997: 250). performance of that worker's discrete task" (Montgomery 1997: 250). Divide work nearly equally between managers and workers, so that the Divide work nearly equally between managers and workers, so that the

managers apply scientific management principles to planning the work managers apply scientific management principles to planning the work and the workers actually perform the tasks. and the workers actually perform the tasks.

Frank GilbrethFrank Gilbreth

Gilbreth reduced all motions of the hand into some Gilbreth reduced all motions of the hand into some combination of 17 basic motions. These included combination of 17 basic motions. These included grasp, transport loaded, and hold. Gilbreth named grasp, transport loaded, and hold. Gilbreth named the motions therbligs, "Gilbreth" spelled backwards the motions therbligs, "Gilbreth" spelled backwards with the with the thth transposed. He used a motion picture transposed. He used a motion picture camera that was calibrated in fractions of minutes camera that was calibrated in fractions of minutes to time the smallest of motions in workers. to time the smallest of motions in workers.

Lillian GilbrethLillian Gilbreth

Lillian Gilbreth's work focused on inefficiency and waste - Lillian Gilbreth's work focused on inefficiency and waste - not only the waste of time and motion but also the waste of not only the waste of time and motion but also the waste of potential human satisfaction and fulfillment that potential human satisfaction and fulfillment that couldcould be be derived from work. She believed that poorly planned jobs derived from work. She believed that poorly planned jobs made work tiresome and destroyed enjoyment of the task. made work tiresome and destroyed enjoyment of the task. Her theory was that managers and owners needed to Her theory was that managers and owners needed to structure authority in the workplace and that each structure authority in the workplace and that each employee deserved basic human dignity. employee deserved basic human dignity.

Story time-Times a WastingStory time-Times a Wasting

How did Frank Gilbreth show how not to How did Frank Gilbreth show how not to waste our time?waste our time?

Would Frederick Taylor believe in training?Would Frederick Taylor believe in training? Would Lillian Trust Manager perception or Would Lillian Trust Manager perception or

the work environment over the worker’s the work environment over the worker’s perception?perception?

Who would Henry Gantt avoid getting Who would Henry Gantt avoid getting behind schedule?behind schedule?

Scientific ManagementScientific Management

Frederick Taylor promotedFrederick Taylor promoted– Time and motion studiesTime and motion studies– SpecializationSpecialization– Management and worker cooperationManagement and worker cooperation– Piece rates, incentives, and bonusesPiece rates, incentives, and bonuses

Scientific ManagementScientific Management

Frank and Lillian GilbrethFrank and Lillian Gilbreth– Coined “motion study” and “time study”Coined “motion study” and “time study”– Studied motions used in workStudied motions used in work– Designed work processes to predict completion timesDesigned work processes to predict completion times– Believed there was only “one best way” to perform a Believed there was only “one best way” to perform a

processprocess– Established symbols (therbligs) for each hand motionEstablished symbols (therbligs) for each hand motion

Scientific ManagementScientific Management

Henry GanttHenry Gantt– Developed scheduling approach to view Developed scheduling approach to view

overlapping tasks that need to occur over a overlapping tasks that need to occur over a given timegiven time

– Supported motivating employees with rewardsSupported motivating employees with rewards– Promoted quality leadership and encouraged Promoted quality leadership and encouraged

skill buildingskill building

Administrative Management Administrative Management (Late 1800s–1920s) (Late 1800s–1920s)

Describes how to structure an organizationDescribes how to structure an organization Henri Fayol—Father of Modern Henri Fayol—Father of Modern

ManagementManagement– Defined the five functions of managementDefined the five functions of management– Categorized management features into 14 Categorized management features into 14

principlesprinciples

Human Relations Movement Human Relations Movement (1930–Present)(1930–Present)

Also known as Behavioral ManagementAlso known as Behavioral Management Recognizes workers as “social men”Recognizes workers as “social men” Landmark study: Hawthorne StudiesLandmark study: Hawthorne Studies

– Effect other humans have on worker productivityEffect other humans have on worker productivity– Harvard Researchers:Harvard Researchers:

Elton Mayo, T.N. Whitehead, George Homans, Fritz Elton Mayo, T.N. Whitehead, George Homans, Fritz RoethlisbergerRoethlisberger

Elton Mayo identified “Hawthorne Effect”Elton Mayo identified “Hawthorne Effect”

Hawthorne EffectHawthorne Effect

Environmental changes have no influence Environmental changes have no influence on productivityon productivity

Increased attention to the employees serves Increased attention to the employees serves as a catalyst for productivityas a catalyst for productivity

Human Relations MovementHuman Relations Movement

Chester BarnardChester Barnard– Acceptance theory and strategy planning emphasisAcceptance theory and strategy planning emphasis– Three functions of the executive:Three functions of the executive:

1.1. Establish and maintain an effective communication systemEstablish and maintain an effective communication system

2.2. Hire and retain effective personnelHire and retain effective personnel

3.3. Motivate those personnelMotivate those personnel

Acceptance TheoryAcceptance Theory

Managers only have as much authority as Managers only have as much authority as employees allow them to have.employees allow them to have.

Employees must understand what the manager Employees must understand what the manager wants them to do.wants them to do.

Employees must be able to comply with the Employees must be able to comply with the directive.directive.

Employees must think that the directive is not Employees must think that the directive is not contrary to the organization’s objectives and contrary to the organization’s objectives and employee’s personal goals.employee’s personal goals.

Human Resources School Human Resources School (1950–Present)(1950–Present)

Added motivation and leadership techniques Added motivation and leadership techniques to the Human Relations School principlesto the Human Relations School principles

Recognizes employee creativity and Recognizes employee creativity and competencycompetency

Acknowledges that employees want Acknowledges that employees want meaningful work and to participate in meaningful work and to participate in decision makingdecision making

Theories X, Y, and ZTheories X, Y, and Z

Theory X: Employees need to be directed Theory X: Employees need to be directed because they are lazy and irresponsiblebecause they are lazy and irresponsible

Theory Y: Employees are responsible and Theory Y: Employees are responsible and able to self-directable to self-direct

Theory Z: Employees will participate in Theory Z: Employees will participate in group decision making and there will be an group decision making and there will be an emphasis on quality improvementemphasis on quality improvement

Contemporary Management Theories Contemporary Management Theories (1940s–Present)(1940s–Present)

Contingency TheoryContingency Theory– Mary Parker Follett’s Law of Situation—There is no “one Mary Parker Follett’s Law of Situation—There is no “one

best way”best way”– Fred E. Fielder—Consider factors and variablesFred E. Fielder—Consider factors and variables

Management by ObjectivesManagement by Objectives– Peter Drucker—establishing targets for employees and Peter Drucker—establishing targets for employees and

managers to achievemanagers to achieve Organizational DevelopmentOrganizational Development

– establishing a structure that addresses the employee’s establishing a structure that addresses the employee’s social and productive needs and establishes shared social and productive needs and establishes shared goalsgoals

Contemporary Management Contemporary Management Theories (1940s–Present)Theories (1940s–Present)

Systems Theory—Collection of systems that Systems Theory—Collection of systems that interact with external and internal environment as interact with external and internal environment as well as the resources and inputswell as the resources and inputs– Cybernetics—Flow of communication within a complex Cybernetics—Flow of communication within a complex

organizationorganization– Chaos Theory—Organizational and behavior changes Chaos Theory—Organizational and behavior changes

are caused by unpredictable events rather than through are caused by unpredictable events rather than through the control of managementthe control of management

– Catastrophe Theory—Evaluates the magnitude of Catastrophe Theory—Evaluates the magnitude of behavior changes that arise from small changes in behavior changes that arise from small changes in circumstancescircumstances

Organizational Development (OD)Organizational Development (OD)

Benefits of ODBenefits of OD– Empowers leaders and employeesEmpowers leaders and employees– Creates culture of continuous improvement and Creates culture of continuous improvement and

facilitates changefacilitates change– Facilitates constructive criticismFacilitates constructive criticism– Allows managers and employees to control the results Allows managers and employees to control the results

and jobsand jobs– May result in cost reductionMay result in cost reduction– Improves customer satisfaction and innovationImproves customer satisfaction and innovation– Establishes a more flexible organizationEstablishes a more flexible organization

Entrepreneurial SchoolEntrepreneurial School

Individuals seekIndividuals seek– autonomyautonomy– rewards for contributionsrewards for contributions– intimacy of teamsintimacy of teams– environments in which they can be innovativeenvironments in which they can be innovative

Break away from traditional organizationsBreak away from traditional organizations– May establish their own companyMay establish their own company