PLANNINGDecision-Making & Budgeting

Introduction to Nursing Leadership and ManagementDR. BETHEL BUENA VILLARTA

UNIVERSITY OF THE PHILIPPINES MANILACollege of Nursing

A R E P O R T

DAQUIGAN, LAURENCE A.KASILAG, RAIZA MICHAELLA A.NADATE, ALLAN CHESTER B.SILVA, JOHN MARC DANIEL V.

TRAVILLA, FAYE S.

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TABLE OF CONTENTS

Title Page

Introduction to PlanningDifferentiating Decision Making, Problem Solving and Critical ThinkingImportance of Decision MakingTHEORETICAL APPROACHES TO PROBLEM SOLVING AND DECISION MAKING

The Traditional Problem-Solving ProcessThe Managerial Decision Making Process

ORGANIZATIONAL MODELS FOR DECISION MAKINGCRITICAL THINKINGGROUP DECISION MAKINGCREATIVE DECISION MAKING

Creative Thinking TechniquesBlocks to CreativityDecision-Making Tools

ETHICAL ASPECTS OF DECISION MAKINGMoral frameworks and ethical concepts

THE NURSE IN ETHICAL DECISION-MAKINGETHICAL DECISION-MAKING MODELSFRAMEWORK FOR ETHICAL DECISION-MAKING

BUDGETING AND FISCAL PLANNINGSteps in the Budgetary ProcessFiscal Planning

LEADERSHIP ROLES AND MANAGEMENT FUNCTIONS IN FISCAL PLANNINGTYPES OF BUDGETRESOURCE ALLOCATING

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INTRODUCTION TO DECISION-MAKING

Because of the notion that decision-making is synonymous with management, and is also one of the criteria to evaluating management expertise, developing skill in decision making is imperative to increasing management and leadership effectiveness. Examining issues critically, solving problems and making decisions comprise majority of the manager’s time. Decision making skills improve with practice using established tools, techniques and strategies (Marquis and Huston, 2003).

Differentiating Decision Making, Problem Solving and Critical Thinking

- A decision, according to Grohar-Murray, 1994 is “a complex conclusion derived from a set of premises that relate to a situation”

- Decision Making - is a complex, cognitive process often defined as choosing a particular

course of action. This definition implies doubt is present between several courses of action and that a choice had to be made to eliminate the doubt (Marquis and Huston, 2003).

- is the process of selecting one course of action from alternatives (Marriner–Tomey, 1991)

- is a process of arriving at a conclusion after analysis of units of related information (Grohar-Murray 1994)

- Is a systematic, sequential process of choosing among alternatives and putting the choice into action (Lancaster in Roussel, 2006)

- Problem Solving always includes a decision making step. It is a systematic process that focuses on analyzing a difficult situation (Marquis and Huston, 2003).

- Critical thinking is sometimes referred to as reflective thinking, is related to evaluation and is broader in scope than problem solving and decision making (Marquis and Huston, 2003). It involves higher order reasoning and evaluation and has both a cognitive and affective component (Coluciello in Marquis and Huston, 1997). It also has two main components namely reasoning and creative analysis (Pesut and Herman in Marquis and Huston, 1998). Insight, intuition, empathy and willingness to take action are also components of critical thinking and are, to some extent, necessary in decision making and problem solving.

Problem solving focuses on identifying the root of the problem and usually takes time and energy. On the other hand, decision making does not require the full analysis needed in problem solving and is usually triggered by a problem that is handled in a way that it does not solve the root cause. It is the prerogative of the decision maker whether to solve the root cause of the problem or not. This may be affected by lack of energy, time or resources.

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Importance of Decision Making

Decision making may seem like a shallow process, but sometimes, this is the appropriate choice over problem solving. Hospitals have protocols for routine situations, but in exceptional instances where decision making is difficult, a mature sense of judgment is needed. Decision making is a skill that can be learned and staff nurses learn from their leaders. Efficient decision making may not just solve immediate problems, but also spur good decision making by the staff in the long run (Marriner–Tomey, 1991).

THEORETICAL APPROACHES TO PROBLEM SOLVING AND DECISION MAKINGAlthough only a part of the problem solving process, decision making is an important step. Efficient decision making is learned through practice, however, trial-and-error does not work for everyone because much is left to chance. Some educators have argued that students nowadays have poor decision making skills because our mode of instruction do not teach students how to reason insightfully from multiple perspectives. Incorporating formal instruction into the curriculum increases critical reasoning and eliminates the use of trial-and-error because it focuses the learning on a proven process. (Marquis and Huston, 2003).

The Traditional Problem-Solving Process

A. Identify the problemB. Gather data to analyze the causes and consequences of the problemC. Explore alternative solutionsD. Evaluate the alternativesE. Select the appropriate solutionF. Implement the solutionG. Evaluate the results

Weaknesses:- Time constraints – It is difficult to go through the whole process when

there is urgent need to reach a decision or solve a problem- Lack of initial objective setting up – The lack of objectives can cause the

problem solver to become distracted

The Managerial Decision Making Process

This model is improves the traditional problem solving model by adding a goal-setting step. It relies on the scientific decision-making process:

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A. IDENTIFY THE PROBLEM AND SET OBJECTIVES

The nurse manager must be good in questioning the situation at hand. It is imperative that the factors causing the problem be defined. Through this, the nurse manager can develop hypotheses and through the process of elimination, identify the cause/causes of the problem (Marriner–Tomey, 1991). It involves:

1. Pre-determined objectives – provide for focus for the decision. It is important to have clearly defined objectives which must be consistent with individuals’ and organization’s stated philosophy.

2. Gathering of relevant data – Decisions are based on knowledge and information. One can identify the problem by analyzing the situation and in order to do that and make a sound decision, all facts must be gathered first. The one who gathers information must be vigilant that their own preferences and those of others are not mistaken for facts. It is therefore a must that one learns to process and obtain accurate information.

3. Identifying the real cause of the problem - It is only when the right and real problems have been identified that effective decision making can be initiated

4. Prioritization (Reitz in Roussel, 2006):a. Deal with problems in the order in which they appearb. Solve easiest problems firstc. Solve crises before all other problems

B. SEARCH FOR ALTERNATIVES

Course of action is limited when alternatives are not explored. Solutions must be exhausted in order to ensure that decision making is not constrained by limited choices. When solving a problem, the nurse manager should first determine whether the situation is covered by policy. If it is not, he or she will depend upon her knowledge or experience in searching for alternatives. However, experience is not always enough. While it may be true that the more seasoned nurse manager will be able to come up with more alternatives, health care changes come hand-in-hand with the rapidly changing times. Thus, yesterday’s choices or solutions may not necessarily work today. A good nurse manager looks beyond her experiences and seeks or consults the knowledge and field of experience of her colleagues by continuing education, professional meetings, and review of literature, correspondence and brainstorming with the staff (Marriner–Tomey, 1991).

C. EVALUATE ALTERNATIVES

Several solutions exist for different problems. Some may be more practical but less effective, other may be more effective, but less practical. Common factors to be considered in weighing the alternatives include:

1. Practicality2. Effectivity

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3. Patient safety4. Staff acceptance5. Moral and legal implications6. Public acceptance7. Cost 8. Risk of failure

Several sources of faulty logic include:1. Overgeneralizing

- “Because A has this characteristic, all A’s have that same characteristic”- the problem of stereotyping

2. Affirming the consequences - “A is good, therefore, B is not good”- For example, assuming that innovations in nursing interventions make the old interventions utilized in the ward useless.

3. Arguing from analogy - “Because A is present in B, then A and B are alike in all other aspects”- An example would be arguing that since intuition plays a large part in both clinical and managerial nursing, the characteristics of a good

D. CHOOSE

The number of alternatives would depend on how creative and productive a nursing team is. Nursing management that facilitates group exploration of decision making opportunities and does not readily accept an obvious solution increases the number and quality of the alternatives. Ranking preferences is important after all facts have been weighed and alternative solutions have been explored. This step involves narrowing solutions to 2-3 alternatives.

Barriers to generating effective solutions (Marriner–Tomey, 1991)A. Eagerness to reach a decision – may lead to premature solutionsB. Considering only few alternatives – blocks good decisionsC. Avoidance of the real problemD. Lack of clear problem definitionE. Insufficient dataF. Early statement of attitude by a status figureG. Mixing of idea generation and idea evaluationH. Lack of staff commitment due to poor implementation by the

managerI. Large group number

Questions that may be asked to estimate the value of decision made:A. Will this decision accomplish the stated objectives?

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B. Does it maximize effectiveness and efficiency? (You must know available resources before reaching out for outside sources)

C. Can the decision be implemented?

E. IMPLEMENT DECISION

Once a decision is made, the manager needs to communicate it to appropriate staff associates in a manner that is professional and would not arouse antagonism. The nurse manager may control the environment and “explain the decision and procedures in an effort to win the cooperation of those responsible for its implementation ” (Marriner–Tomey, 1991).

The major management functions in implementing a decision include:

a. Planning – which entails consideration and selection of realistic objectives, policies and procedures;

b. Organizing – means helping personnel understand the decision and the procedures necessary for implementing the decision;

c. Staffing – selection of right person/s to carry out the decisiond. Controlling the environment and the group to prevent adverse effectse. Follow-up appraisal through observation, feedback and reports – to find

out if the problem has been resolved.

F. FOLLOW UP AND CONTROL

Review and analyzing of results can be accomplished by audits, checklists, ratings and rankings. New solutions can sometime lead to new problems. As a result, additional decisions may need to be made and monitored.

COMPARISON OF DECISION-MAKING, PROBLEM SOLVING and the NURSING PROCESS

DECISION- MAKING PROBLEM- SOLVING NURSING PROCESS

1. Identify the problems, and analyze the situation.

1. Assess – define problem.

1. Assess.

2. Explore the alternatives. 2. Plan – generate a list of alternative and evaluate for cost, feasibility, and risk.

2. Select a nursing Diagnosis

3. Choose the most desirable alternative.

3. Choose the best solution. 3. Plan care.

4. Implement the decision. 4. Implement the apparent best solution.

4. Implement the care plan.

5. Evaluate the results. 5. Evaluate the 5. Evaluate the outcomes.

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effectiveness.

Source: Marquis, B.L. and Carol J. Huston. (2003). Comparison of the Decision Making Process with the

Management and Nursing Processes. Leadership Roles and Functions in Nursing: Theory and Application. Lippincott William and Wilkins. Philadelphia.

ORGANIZATIONAL MODELS FOR DECISION MAKING

RATIONAL MODEL- Based on the premises of common goals, technical competence, and

sequential process to achieve goals when individual values are consistent with organizational values

- Focuses on how decisions are ought to be made- Assumes that the decision maker is completely rational and unbiased, and

has all the information needed to make the decision and that all possible alternatives are considered

- Decision-maker selects the optimum or best choice- Feedback increases the understanding of causal relations (useful for future

decision-making)- Decision making proceeds through the following sequence of steps: problem

identification, development of criteria against which alternative solutions can be evaluated, identification of alternative courses of action, evaluation of alternatives, selection of the best alternative, and implementation.

- Advantages: helps unify associates with the goals of the agency- Disadvantages: unrealistic expectations of how people function, a large

amount of time for processing, and narrow thought processes that can become counterproductive

POLITICAL MODEL- Based on the premises of a win-win situation, diversity of interests, even

dispersion of power, and available forums for people with multiple, conflicting values that are protecting their own self-interests

- Describes how decisions are to be made- The decision maker is neither rational nor objective and unbiased; it is usually

a lobby majority who makes the decisions.- Changes are based on negotiations instead of causal links; changes are

unpredictable- The process involves a cycle of bargaining among the decision makers in

order for each one to try to get his or her perspective to be the one of choice – more specifically, to sway powerful people within the situation to adopt his or her viewpoint and influence the remaining decision makers.

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- This model does not involve making full information available, since it is based upon negotiation that is often influenced by power and favors. In fact, information is often withheld in order to better maneuver a given perspective.

- Advantages: takes less time than consensus models; can promote creative solutions with majority support that can be implemented even if there are differences in viewpoints

- Disadvantages: decisions may be limited to the statesmen’s narrow views

COLLEGIAL MODEL- Based on the premises of group consensus, mutual respect, and adequate

time- Common in an academic community, often involves full participation of a

community of peers for decision-making- There are shared responsibilities for organizational goals based on the

professional background and interests of the participants.- Decisions tend to support general welfare- Feedback is usually informal and dependent on participants’ observations

and priorities- Advantages: implementation tends to go smoother because of consensus- Disadvantages: takes considerable time due to numerous group meetings

BUREAUCRATIC MODEL- Based on the premises of historical norms and operating routines- Common in health care- Implementations usually are through use of routines as determined by

policies and procedures that lead to predictable outcomes and only slight adaptations to operations

- Hierarchal bureaucracy determines the key-players/decision-makers- Time for implementation depends on the efficiency of the operations- Does not recognize informal channels of communication and ignores

political struggles for power- Alternative solutions generated may be limited and depend on the

historical success of the agency and the corporate memory- If there is a history of efficiency, changes consistent with history and

norms may be made with little resistance

GARBAGE CAN MODEL- Based on the premise of pure accident- Decisions are unplanned and coincidental based on multiple diffuse values- Key players may be associates that perceive an opportunity and contribute to

organization anarchy and adhocracy- Implementation is incidental as well, and is not planned - Outcomes occur by chance and may repeat errors; they depend on the

creativity of the decision-maker- Advantages: it is possible to consider creative solutions to problems- Disadvantages: because there are no goals or criteria for evaluating

outcomes, errors may be repeated

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CYBERNETIC MODELThree phases:A. Needs Assessment

- includes determining the desired outputs of a program, nature of the problem, level of goal accomplishment expected, program strategies, goal accomplishment criteria, and construction of a causal chain for program processes and outcomes

B. Program Implementation- involves determining that the program is in place and progressing

according to the time planC. Results assessment

- includes determination that the program outcomes were met and that the program outputs justified the costs; long-term impact on quality of life needs to be determined

IMPLICIT FAVORITE MODELIn this model, "decision making" is essentially a process of confirming a

choice/decision that has already been made. The actual decision was made in an intuitive and unscientific fashion.

A. Is descriptive in that it describes how decisions are actually made.B. The decision maker seeks to simplify the decision making process by

identifying an "implicit favorite" before alternatives are evaluated; this often occurs subconsciously.

C. The decision maker is neither rational nor objective and unbiased.D. After a "favorite" is selected, the decision maker tries to appear rational and

objective by developing decision criteria and by identifying and evaluating various alternatives; however, this is done in a biased way so as to ensure that the favorite appears superior on these criteria and thus, can legitimately be selected as the "best" solution.

CRITICAL THINKING

What it is:

- Reasonable, reflective thinking focused on what to believe or do (Ennis and Milman, 1985)

- is “the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from or generated by observation, experience as a guide to belief and action.” (Scriven and Paul, 2004)

- The propensity to engage in an activity with reflective skepticism (McPeck, 1990)

- The art of thinking about thinking while thinking to make thinking better (Paul and Heaslip, 1995)

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- Purposeful, self- regulatory judgment; an interactive, reflective reasoning process of making a judgment about what to believe or do (Facione and Facione, 1996)

- A composite of attitudes, knowledge, and skills which includes: (1) attitudes of inquiry that involve an ability to recognize the existence of problems and an acceptance of the general need for evidence in support of what is asserted to be true; (2) knowledge of the nature of valid inferences, abstractions, and generalizations in which the weight or accuracy of different kinds of evidence are logically determined; and (3) skills in applying the above knowledge and attitudes.

What it is NOT- Common sense- Spontaneous response- Regular or “normal” thinking- Being critical or judgmental- Disorganized- Emotion- driven- Lack of concern with motives, facts, underlying reasons

Elements of Critical thinking and ReasoningA. Purpose or Goal: all reasoning has a purpose or goal and requires clarity,

significance, achievability and consistency of purposeB. Central Problem: All reasoning is an attempt to prevent or solve a problem,

figure something out or answer a questionC. Point of View: Reasoning is improved when multiple relevant point of view are

sought and articulated clearly.D. Empirical Dimension: Reasoning is only as sound as the evidence on which it

is based. E. Conceptual Dimension: Reasoning is only as relevant, clear and deep as the

concepts that form it.F. Assumptions: all reasoning is based on assumptions, which are suppositions

or statements accepted without proof.G. Implications and Consequences: All reasoning has implications, consequences

and directionH. Inferences and Conclusion: All reasoning has inferences by which one draws

conclusions and gives meaning to the data.

Critical Thinking in Nursing- Nurses need to think critically in order to use the appropriate knowledge and

skilled judgments in delivering patient care (Brooks & Shepherd, 1990)- Alfaro- LeFevre (1995): “A key point to realize is that critical thinking is

contextual… these skills require job- specific knowledge, and must be mastered within the context”

- Young (1998): “in our hearts, we know what critical thinking is.. an individual who is able to respond to problems by using the nursing process effectively is a critical thinker.”

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Key Assumptions- It is rational- It involves conceptualization- It requires reflection- It involves creative thinking- It requires basic and advanced nursing knowledge- The skills can be taught, learned, and measured- The skills need to be practiced and reinforced- It is both a process and an outcome

Why is it essential to be a Critical Thinker in Nursing?- To manage complex dilemmas- To exchange views and information- To broaden or change our thinking and learning- For self- actualization

Some Traits of Critical Thinkers(APA Delphi Study; Facione, 1990)- Truth- seeking- honest and objective in pursuing inquiry- Open- mindedness- sensitive to own bias, respects rights of others to hold

differing opinions- Analyticity- alert to potentially problematic situations- Systematicity- organized, orderly, focused, diligent inquiry- Self- confidence- trust in own reasoning- Inquisitiveness- intellectual curiousity- Maturity- disposed to make reflective judgments

GROUP DECISION MAKING

Advantages- Wider range of knowledge- Increases self-expression, innovation & development- Less time consuming and less expensive (in the long run)

Disadvantages- May result from social pressures- Group participants change as well as the problems- Members may become more interested in winning an argument than in

determining the best alternative

COMMITTEE/TASK FORCE ASPECTSDefinition of Committee: (Marriner-Tomey, 2004)

- Group of people chosen to deal with a particular topic or problem overtime

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- May have advisory, informational, coordinating, or decision-making responsibility

Types of Committees:- Staff committee – serves merely in an advisory capacity- Line committee – an executive group responsible for making decisions

affecting subordinates- Formal committee – part of the organizational structure and has specific

duties and authority; tend to be permanent- Informal committee – has not been delegated authority and are often

primarily for discussion; more likely to be temporary- Ad hoc committee – appointed to collect data, analyze it, and make

recommendations

Advantages:- Burden can be shared- Group deliberation and judgment can be advantageous- Complex problems are more manageable- Increases the department head’s understanding of the situation and

commitment to the decision- Unanimity helps increase the support and confidence of subordinates

Disadvantages:- More leadership ability is required- May make the manager appear to be a figurehead- May control a weak administrator- The manager may use committees to avoid responsibilities or to delay

decisions- Difficult to identify who is responsible for a poor committee decision- Slow, ponderous, expensive- Pressure for unanimity may discourage input from more aggressive and

creative members- Consensus through compromise may decrease the quality of the decision- Indecisiveness can result in an adjournment without action taken and can

contribute to a minority tyranny of the strongest members

COMMITEE FUNCTIONING- Committee decisions are particularly useful for policy formulation and

planning- Define the scope and authority of the committee- Size of the committee is important- Good chairpersonship can increase the effectiveness of a committee

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- The chairperson should keep the discussion on the subject and help integrate committee deliberation

- Committees permit simultaneous participation

CREATIVE DECISION MAKING

THE CREATIVE PROCESS- Similar to problem-solving process, but the emphasis is different- Decision-making focuses on the choice of solution; creative process focuses

on the uniqueness of the solution

Creativity is a latent quality, activated when a person becomes motivated by the need for self-expression or by the stimulation of a problem

CREATIVE DECISION-MAKING PROCESS1. Felt need – when decision makers are confronted with a problem, they start seeking a solution2. Preparation – phase where creative ideas emerge. Innovation is partially dependent on the number of options considered. By exploring relationships among potential solutions, one may identify additional solutions.3. Incubation – period for pondering the situation4. Illumination – the discovery of the solution5. Verification – period of experimentation when the idea is improved through modification and refinement.

CREATIVE THINKING TECHNIQUES

Convergent Thinking The problem is divided into smaller and smaller pieces to find a more manageable perspective. (Treffinger, Isaksen and Dorval, 1999)

Divergent ThinkingOne’s view of the problem is expanded. The problem is considered in different ways. (Treffinger, Isaksen, and Dorval, 1999)

Ladder of AbstractionIt helps participants explore the task in broader or narrower ways or at varying levels of abstraction. It encourages making abstract options more concrete,

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focused, and specific and making specific narrow options broader and more abstract.

Forced AssociationThe situation requiring improvement is identified → use free association to generate a list of words associated with the situation → look for relationships between the original list and the associated list → lists are critically analyzed to choose useful words in addressing the situation.

Visual Trek/Visual ConfrontationIt is good for stretching to generate original and unusual options. Participants make new connections by making a mental journey away from a task and then connecting back to the original task.

Think TanksFive to eight people are gathered together in an exotic or different environment. This is particularly useful for future projections.

Brainstorming It is a divergent way of thinking used to create a free flow of ideas. It seems to work best for simple and specific problems. It fosters the production of creative ideas.

Reverse BrainstormingIt encourages convergent thinking to break down ideas into smaller parts.

Brain WritingIt encourages free association and recording of ideas without verbal interaction. A problem is identified → participants are given a blank piece of paper and they would write at least four ideas, suggestions, solutions, etc. → the paper is passed someone to stimulate more ideas, which are then written down on the paper → process is repeated.

Collective Notebook TechniqueParticipants write thoughts and ideas → notebook is given to another person for him to read, look for patterns, and synthesize → participants meet, analyze the results, and make recommendations

Stepladder TechniqueIt structures the entry of group members into the group to ensure that each member contributes to the decision-making process. Two members try to solve the problem → a 3rd member joins, presents preliminary solution → the 3 of them discusses possible solutions → a 4th member joins and the process is repeated until all the members have joined. The final decision is delayed until all the members have presented ideas.

Morphological MatrixIt helps combine elements from various attributes by creating a framework for new options. Each parameter is listed as a column heading in the matrix.

The Delphi Technique

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It allows members who are dispersed geographically to participate in decision-making without meeting face to face. However, it is time-consuming and may develop fewer alternatives. A problem is identified → members are asked to suggest potential solutions through a questionnaire → anonymously return questionnaire → results are compiled → each member is sent a copy of the compiled results and asked for suggestions again → process is repeated until consensus is reached

Other techniques include lists, drawings, synetics, visualization, visually identifying relationships, forecasting alternative future scenarios, self-interrogation checklist, modeling, meditation, evaluation matrix, advantage-limitations-unique method, paired comparison analysis, musts-wants technique, highlighting and SML (short-medium-long) method.

BLOCKS TO CREATIVITY may include negative attitudes, self-censorship, inflexibility, lack of confidence, misconceptions, lack of effort, habits, conformity and reliance on authority.

DECISION-MAKING TOOLS

SimulationIt is the way of using models and games to simplify problems by identifying the basic components and using trial and error to determine a solution.

- Through it, the manager may compare alternatives and their consequences.

- Models are developed to describe, explain, and predict phenomena; it is a technique of abstraction and simplification for studying something under varying conditions.

- Game Theory is a simulation of system operations; the player develops a strategy that will maximize gains and minimize losses, regardless of what the competitor does; it simulates real-life situations in a laboratory setting.

Critical Path Method (CPM)- It calculates a single TIME ESTIMATE (longest time possible) for each

activity, - A cost estimate is figured for both normal and crash operating

conditions.- Normal means the least-cost method and crash refers to conditions in

less-than-normal time.- It is particularly useful where cost is a significant factor and

experience provides a basis for estimating time and cost.

Linear Programming

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- It uses matrix algebra or linear mathematical equations to determine the best way to use limited resources to achieve maximal results.

- It is based on the assumption that a linear relationship exists among the variables and that the limits of variations can be calculated.

Decision Tree- A graphic method that can help managers visualize the available,

outcomes, risks and information needs for a specific problem over a period of time; based on the fact that decisions are often tied to the outcome of other events

- Used to plot a decision over time to allow visualization of various outcomes.

Decision Grids- It allows the manager to visually examine the alternatives and

compares each against the same criteria.

Program Evaluation Review Technique (PERT)- Popular tool to determine timing of decisions- Essentially a flowchart when activities/events must occur if a final

event is to take place- Consider: optimistic time, most likely time, and pessimistic time

Others - Pay-off tables, Probability Theory, Queuing Theory

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ETHICAL ASPECTS OF DECISION MAKING

In making decisions, there are also some ethical considerations to make, especially in nursing where it is impossible to escape situations that call for judgments requiring serious consideration of what is right or best for clients, their families, and the community (Ellis and Hartley, 2007). To be able to understand more how ethics is intertwined with decision making, one must first know the different concepts in ethical decision making.

Ethics and Morals are two concepts which are sometimes used interchangeably. However, these two actually has separate meanings. Ethics is a branch of philosophy (the study of beliefs and assumptions) referred to as moral philosophy. The word ethics is derived from the Greek term ethos, which means customs, habitual usage, conduct, and character. Morals, on the other hand, come from the Latin mores which refers to custom or habit. These are the standards for what is right and wrong. Religious beliefs, social influence and group norms are the usual bases of morals. Thiroux (1998) suggests that ethics seems to pertain to an individual’s character, whereas morality speaks to relationships between human beings (Ellis and Hartley, 2007).

Bioethics is defined as a discipline dealing with the ethical implications of biological research and applications especially in medicine. Nursing ethics can therefore be defined as ethics as applied in the nursing practice.

To be able to deal properly situations that require ethical decision making, ethical theories and moral frameworks should be identified and understood first. An ethical theory is a moral principle or a set of moral principles that can be used to assess what is morally right or morally wrong in a given situation.

MORAL PRINCIPLES OR ETHICAL CONCEPTS

AUTONOMYThis ethical concept basically involves the right of self-determination, independence, and freedom. This word was derived from the Latin auto meaning “self” and nomus, which means “control.” Others consider autonomy as respect for the individual and that each individual is unique but equal to other individuals. In the health care setting, the concept of autonomy is closely tied with informed consent.

BENEFICENCE AND NON-MALEFICENCE Beneficence refers to the obligation to do good whereas non-maleficence refers to the prohibition of intentional harm or preventing evil or harm. As far back as the time of Hippocrates, these principles have already been observed. However, sometimes, most especially in the health care practice, it cannot be avoided that unintentional harm is done to individuals. These situations include the side effects of drug or treatment such as irradiation or chemotherapy. Furthermore, there are

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occasions when patients opt to refuse treatment. There are also situations wherein it is also difficult to decide who will determine what is good for a specific person in a specific situation (e.g. unconscious patient, infants). In these situations, it is important that a nurse will be able to weigh sides properly to be able to make a good decision.

JUSTICEThis refers to the obligation to be fair to all people. Distributive justice requires the fair distribution of burdens and benefits (Davis et al, 1997). The expectation is that all individuals will have equal opportunity to access scarce resources and will receive the care and service each is due. According to Armstrong and Whitlock (1998), there are six criteria that define the just distribution of limited resources: need, equity, contribution, ability to pay, effort, and merit.

- Need involves known medical need, not elective procedures. - Equity addresses trying to distribute equally to all in need. - Contribution considers what an individual might be expected to give to

society at a future date. - Ability to pay is self-explanatory, but to deny needed health services

because an individual cannot pay contradicts the concepts of charitableness that exist in our society.

- Patient effort deals with a patient’s compliance or noncompliance with medical advice.

- Merit addresses the potential that exists for benefit from the additional investment of limited health resources.

FIDELITYThis refers to the obligation to be faithful to the agreements, commitments, and responsibilities that one has made to oneself and others. This concept also deals with the responsibilities of health care personnel to individuals, employers, the government, society, and self.

VERACITY This refers to telling the truth or not intentionally deceiving or misleading patients. Although this principle may seem easy to understand, there are actually a lot of instances wherein decision making is difficult. For example, should one tell the truth (veracity) when the truth will cause harm to an individual.

STANDARD OF BEST INTEREST This principle is applied when a patient is unable to make an informed consent. During these situations, the health care providers or family’s decision is followed taking into account tangible factors such as how the patient may be harmed, how the patient may benefit, and physical and fiscal risks. Other source of decisions can be written documents or living wills. When unilateral decisions which often imply that the decision-maker knows occur, paternalism occurs. Paternalism is the deliberate limiting of a patient’s autonomy.

THE NURSE IN DECISION MAKING

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A. Codes for nurses in ethical decision-making (ANA, 2001)

The American Nurses Association (ANA) code addresses fairly specific issues and it is not limited to matters of etiquette or broad general statements. Initially, the nurses presented tentative codes in the 1920s, the 1930s, and the 1940s. Finally, in 1950, a code of ethics was adopted.

The ANA House of Delegates approved these nine provisions of the new Code of Ethics for Nurses at its June 30, 2001 meeting in Washington, DC. These are the following:

1. The nurse, in all professional relationships, practices with compassion and respect for the inherent dignity, worth and uniqueness of every individual, unrestricted by considerations of social or economic status, personal attributes, or the nature of health problems.

2. The nurse's primary commitment is to the patient, whether an individual, family, group, or community.

3. The nurse promotes, advocates for, and strives to protect the health, safety, and rights of the patient.

4. The nurse is responsible and accountable for individual nursing practice and determines the appropriate delegation of tasks consistent with the nurse's obligation to provide optimum patient care.

5. The nurse owes the same duties to self as to others, including the responsibility to preserve integrity and safety, to maintain competence, and to continue personal and professional growth.

6. The nurse participates in establishing, maintaining, and improving healthcare environments and conditions of employment conducive to the provision of quality health care and consistent with the values of the profession through individual and collective action.

7. The nurse participates in the advancement of the profession through contributions to practice, education, administration, and knowledge development.

8. The nurse collaborates with other health professionals and the public in promoting community, national, and international efforts to meet health needs.

9. The profession of nursing, as represented by associations and their members, is responsible for articulating nursing values, for maintaining the integrity of the profession and its practice, and for shaping social policy.

B. International Council of Nurses’ code for nurses ethical concepts applied to nursing (2000)

This code states that nurses have four fundamental responsibilities. These are: to promote health, to prevent illness, to restore health, and alleviate suffering.

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According to this code, the need for nursing is universal and that nursing care is not restricted by considerations of age, color, creed, culture, disability or illness, gender, nationality, politics, race or social status.

The code has four sections which specifically deal with concerns of people, practice, the profession, and coworkers. Below are the highlights of the four sections:

Nurses and People- The nurse’s primary responsibility is to people requiring nursing care.- In providing care, the nurse promotes an environment in which the human

rights, values, customs and spiritual beliefs of the individual, family and community are respected.

- The nurse ensures that the individual receives sufficient information on which to base consent for care and related treatment.

- The nurse holds in confidence personal information and uses judgment in sharing this information.

- The nurse shares with society the responsibility for initiating and supporting action to meet the health and social needs of the public, in particular those of vulnerable populations.

- The nurse also shares responsibility to sustain and protect the natural environment from depletion, pollution, degradation and destruction.

Nurses and Practice- The nurse carries personal responsibility and accountability for nursing

practice and for maintaining competence by continual learning.- The nurse maintains a standard of personal health such that the ability to

provide care is not compromised.- The nurse uses judgment regarding individual competence when accepting

and delegating responsibilities.- The nurse at all times maintains standards of personal conduct that reflect

well on the profession and enhance public confidence.- The nurse, in providing care, ensures that use of technology and scientific

advances are compatible with the safety, dignity and rights of people.

Nurses and the Profession- The nurse assumes the major role in determining and implementing

acceptable standards of clinical nursing practice, management, research and education.

- The nurse is active in developing a core of research-based professional knowledge.

- The nurse, acting through the professional organization, participates in creating and maintaining equitable social and economic working conditions in nursing.

Nurses and Co-workers- The nurse sustains a cooperative relationship with co-workers in nursing

and other fields.

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- The nurse takes appropriate action to safeguard individuals when their care is endangered by a co-worker or any other person.

Criteria in identifying situations (ethical dilemmas)

- A difficult choice exists between actions that conflict with the needs of one or more persons.

- Moral principles or frameworks exist that can be used to provide some justification for the action.

- The choice is guided by a process of weighing reasons.- The decision must be freely and consciously chosen.- The choice is affected by personal feelings and by the particular context of

the situation.

ETHICAL DECISION MAKING MODELS

Thompson and Thompson, 1985- Review the situation (health problems, decision needs, ethical

components, key individuals)- Gather information to clarify- Identify the ethical issues- Define personal and professional moral positions- Identify moral positions of key individuals- Identify value conflicts (if any)- Determine who should make the decision- Identify range of actions with anticipated outcomes- Decide on a course of action and carry it out- Evaluate/review results of decision/action

Cassels and Redman, 1989- Identify the moral aspects of nursing care- Gather relevant facts related to a moral issue- Clarify and apply personal values- Understand ethical theories and principles- Utilize competent interdisciplinary resources- Propose alternative actions- Apply nursing codes of ethics to help guide actions- Choose and implement resolutive action- Participate actively in resolving the issue- Apply state and federal laws governing nursing practice- Evaluate the resolutive action taken

Cassells and Gaul, 1998Another framework which nurses may choose to use for ethical decision-making developed by Cassells (Cassells and Gaul, 1998) provides a systematic approach to processing an ethical issue in nursing practice:

- assess and identify the ethical issue,

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- develop a plan based on ethical principles and- demonstrate a process for implementation and evaluation

FRAMEWORK FOR ETHICAL DECISION MAKING

The steps in this framework are taken from various approaches or models. These steps may be used as a guide especially in assisting patients and families who are faced with the need to make ethical decisions.

1. Identify and clarify the ethical problemTo define the ethical concern, the situation must be reviewed and a clear perception of the situation must be attained. The possible ethical principles should also be considered.

2. Gather dataIt is important to have as much information about the situation as possible since the facts of the situation make a difference in what options are possible. It is also essential to seek others viewpoints so that everyone involved will be able to see the situation more clearly.

3. Identify optionsOften, ethical problems have more than one possible solution. The more options identified, the more likely it is that those involved will find one they can support. For each option, consider its impact on each person involved. Also think about the impact on society as a whole if this option were chosen. Consider the ethical theories presented and explore how each option compares with the basic principles of each theory.

4. Make a decisionPatients and families, as well as care providers, may find this difficult and, in some instances, painful. However, to not make a decision is, in fact, making a decision. There will never be enough time, enough data, or enough alternatives in some situations.

5. Act and assessAfter deciding and choosing on an option, the decision must then be carried out. This may involve working with others or personally carrying out plans. Patients and families need ongoing support as they carry out their decisions. Assess the outcomes as the processes go forward.

Boundary violationsThe term boundary violations is used to refer to situations in which nurses move beyond a professional relationship and become personally involved with a patient and the patient’s life. Some early indications that boundaries are beginning to break

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down include situations in which the nurse spends extended time with a patient beyond assigned duties or visits the patient when not on duty. Showing favoritism or possessiveness of a patient, meeting patients in isolated areas not required in direct patient care, or personal disclosure by the care provider are other indicators that boundaries are being violated.

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BUDGETING AND FISCAL PLANNING

The cost involved in the delivery of nursing service is one of the key factors that influence teh quality of patient care. There is the challenge to ensure the quality of care and the calibre of the nursing staff in the midst of a cost-controlled environment. Nurses are accountable for the distribution and consumption of a major part of hospital resources. Therefore, budgeting will determine how they will maximize the use of the allocated resources.

Nurse leaders deal with the budget in terms of fiscal planning, determining resource needs, guiding the formulation of justification for resources, negotiating for needed resources, analyzing and anticipating resources, dealing with budgetary problems, and be innovative to become cost-effective.

A budget is a written plan for the allocation of resources and a control for ensuring that results comply with it. Results are expressed in quantitative forms. Its desired outcome is maximal use of resources to meet organizational short and long-term needs. The budget’s value is directly related to its accuracy; the more accurate the budget blueprint, the better the institution can plan the most efficient use of its resources. Because a budget is at best a prediction, a plan, and not a rule, fiscal planning requires flexibility, ongoing evaluation, and revision.

In the budget, expenses are classified as fixed or variable and either controllable or noncontrollable. Fixed expenses do not vary with volume, whereas variable expenses do. Examples of fixed expenses might be a building’s mortgage payment or a manager’s salary; variable expenses might include the payroll of hourly wage employees and the cost of supplies. Controllable expenses can be controlled or varied by the manager, whereas noncontrollable expenses cannot. For example, the unit manager can control the number of personnel working on a certain shift and the staffing mix; he or she cannot, however, control equipment depreciation, the number and type of supplies needed by patients, or overtime that occurs in response to an emergency.

Although budgets are usually associated with financial statements such as revenues, expenses and the like, they may also be non-financial – covering output, materials and equipment. Budgets help coordinate the efforts of the agency by determining what resources will be used by whom, when, and for what purpose.

STEPS IN THE BUDGETARY PROCESS

1. ASSESS

- consider what needs to be covered in the budget. Historically, top-level managers frequently developed the budget for an institution without input from middle- or

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first-level managers. Because unit managers who participate in fiscal planning are more apt to be cost-conscious and better understand the institution’s long- and short-term goals, budgeting today generally reflects input from all levels of the organizational hierarchy. Unit managers develop goals, objectives, and budgetary estimates with input from colleagues and subordinates. Budgeting is most effective when all personnel using the resources are involved in the process. Managers, therefore, must be taught how to prepare a budget and must be supported by management throughout the budgeting process. A composite of unit needs in terms of manpower, equipment, and operating expenses can then be compiled to determine the organizational budget.

2. PLAN

- The budget plan may be developed in many ways. A budgeting cycle that is set for 12 months is called a fiscal-year budget. This fiscal year, which may or may not coincide with the calendar year, is then usually broken down into quarters or subdivided into monthly, quarterly, or semiannual periods. Most budgets are developed for a one-year period, but a perpetual budget may be done on a continual basis each month so that 12 months of future budget data are always available. Selecting the optimal time frame for budgeting also is important; a budget that is predicted too far in advance has greater probability for error. If the budget is short-sighted, compensating for unexpected major expenses or purchasing capital equipment may be difficult.

3. IMPLEMENT

- In this step, ongoing monitoring and analysis occur to avoid inadequate or excess funds at the end of the fiscal year. In most healthcare institutions, monthly computerized statements outline each department’s projected budget and any deviations from that budget. Each unit manager is accountable for budget deviations in his or her unit. Most units can expect some change from the anticipated budget, but large deviations must be examined for possible causes, and remedial action must be taken if necessary. Some managers artificially inflate their department budgets as a cushion against budget cuts from a higher level of administration. If several departments partake in this unsound practice, the entire institutional budget may be ineffective. If a major change in the budget is indicated, the entire budgeting process must be repeated. Top-level managers must watch for and correct unrealistic budget projections before they are implemented.

4. EVALUATE

- The budget must be reviewed periodically and modified as needed throughout the fiscal year. With each successive year of budgeting, managers can more accurately

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predict their unit’s budgetary requirements. Managers develop a more historical approach to budgeting as they grow more adept at predicting seasonal variations in the population they serve or in their particular institution.

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THE MCCLOSKEY MODEL (1989) OF COSTING OUT NURSING SERVICES:

NT/NI x (ANHS+BAI+EC+ICA) = TNC

Where:NT: Nursing Time; NI: Nursing Intervention; ANHS: Average Nursing Hourly SalaryBAI: Benefits across the Institution; EC: Equipment Cost; ICA: Indirect Cost AmountTNC: Total Nursing Care

FISCAL PLANNING

Before, nursing management played a limited role in determining resource allocation in healthcare institutions and Nurse–managers were given budgets without any rationale and were allowed limited input. Because nursing was classified as a “non–income-producing service,’’ nursing input was undervalued.

Recently, healthcare organizations have become aware to the importance of nursing input in fiscal planning, and Nurse managers in the 21st century are expected to be well versed in financial matters. Because nursing budgets now generally account for the greatest share of the total expenses in healthcare institutions, participation in fiscal planning has become a fundamental and powerful tool for nursing.

Fiscal planning is the process of forecasting costs based on current and projected needs. Like other types of planning, the Nurse manager also has a responsibility to communicate budgetary planning goals to staff. The more the nursing staff understands the budgetary goals and the plans to carry out those goals, the more likely goal attainment is.

Fiscal planning must be proactive, flexible, and clearly stated in measurable terms; include short- and long-term planning; and involve as many people as feasible in the budgetary process. This type of planning also requires vision, creativity, and a thorough knowledge of the political, social, and economic forces that shape health care.

LEADERSHIP ROLES AND MANAGEMENT FUNCTIONS IN FISCAL PLANNING

Leadership Roles1. Is visionary in identifying or forecasting short- and long-term unit needs,

thus inspiring proactive rather than reactive fiscal planning.2. Is knowledgeable about political, social, and economic factors that shape

fiscal planning in health care today.3. Demonstrates flexibility in fiscal goal setting in a rapidly changing system.

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4. Anticipates, recognizes, and creatively problem solves budgetary constraints.

5. Influences and inspires group members to become active in short- and long-range fiscal planning.

6. Recognizes when fiscal constraints have resulted in an inability to meet organizational or unit goals and communicates this insight effectively, following the chain of command.

7. Ensures that patient safety is not jeopardized by cost containment.

Management Functions1. Identifies the importance of and develops short- and long-range fiscal

plans that reflect unit needs.2. Articulates and documents unit needs effectively to higher administrative

levels.3. Assesses the internal and external environment of the organization in

forecasting to identify driving forces and barriers to fiscal planning.4. Demonstrates knowledge of budgeting and uses appropriate techniques to

budget effectively.5. Provides opportunities for subordinates to participate in relevant fiscal

planning.6. Coordinates unit-level fiscal planning to be congruent with organizational

goals and objectives.7. Accurately assesses personnel needs using predetermined standards or an

established patient classification system.8. Coordinates the monitoring aspects of budget control.9. Ensures that documentation of patient’s need for services and services

rendered is clear and complete to facilitate organizational reimbursement.

TYPES OF BUDGETS

There are four types of budgets to be discussed in this section: operating or revenue-and-expense budgets, personnel budgets, capital expenditure budgets, and cash budgets.

Operating or Revenue-and-Expense BudgetsThe operating budget projects the day-to-day functions of an agency. This type of budget is developed usually for the upcoming year using data from the previous year. It deals primarily with salaries, supplies, and contractual services. In using operating budgets, nonfinancial factors such as time, materials and space are translated into peso or dollar values.

An operating table shows an input-output analysis of expected revenues and expenses. This includes both controllable and non-controllable expenses including

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personnel salaries, medical-surgical supplies, rent, repairs and maintenance, and legal fees. The presence of non-controllable expenses warrants the need for cushion funds.

Personnel BudgetsPersonnel budgets approximate the cost of direct labor necessary to meet the agency’s objectives. These determine the patterns of recruitment, hiring, assignment, layoff, and discharge of personnel. Like operating budgets, these may be based on staffing patterns, unfilled positions, and reports from the previous year. Several related factors that affect staffing are patient occupancy rate, general complexity of patient cases, seasonal fluctuations, and personnel policies.There are two bases for subsidizing staff and these are position and full-time equivalents. A position is a job for a person no matter how many hours worked while FTE helps assess involvement in a work institute. Productive and non-productive worked time are also two things to consider.

Capital Expenditure BudgetsCapital expenditure budgets include expenditures on physical changes such as replacement and expansion of the plant, major equipment, and inventories. These are major investments which gives reduced flexibility in budgeting since it takes a long time before its costs are recovered. Capital budgets are for long-range planning. In making this type of budget, a ceiling for capital expenses and priorities need to be established.

Cash BudgetsCash budgets are planned to make adequate funds available as needed and use any extra funds profitable. This ensures that the agency has enough cash on hand during the budgetary period, but not too much to lose a significant amount of interest.

ADVANTAGES AND DISADVANTAGES IN BUDGETING

Advantages- establishes accountability by assignment of responsibility and authority- offer a standard of performance- emphasizes the continuous nature of planning and controlling- encourages managers to make careful analyses of operations and make

careful decisions- hasty judgments are minimized- weaknesses in the organization can be easily recognized and addressed- staffing, equipment and supply needs can be projected and waste minimized- financial matters can be handled in an orderly fashion- agency activities can be coordinated and balanced

Disadvantages

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- only aspects of organizational performance that can be converted into monetary value may be considered

- organizational development and research efforts may be ignored- symptoms may be treated as causes- budgetary goals may supersede agency goals and gain autocratic control of

the organization- forecasting is required but uncertain- budget planning is time consuming and expensive

RESOURCE ALLOCATION

Resource Allocation is the distribution of resources – usually finances – among competing groups of people or programs. In the healthcare setting, we need to consider three distinct levels of decision-making:

Resource allocation is needed because of the increased demand for healthcare services from the growing aging population and more people living with chronic diseases and disabilities, and rising costs of these services, healthcare institutions must choose how to allocate healthcare budgets.

Responses and attempted solutions to the problem of limited healthcare resources

1. Increase efficiencyProviders can be more efficient by cutting down waste and unnecessary care. It includes evaluating health technologies and encouraging prevention programs.   2. Distribute resources equitablyThe basis of allocation is value-based and can be in many forms: strict equality, access to determined level of care, access to equal opportunity for care, limiting access to people responsible for their health problems and access based on age or other factors.  3. Adopt managed care plansManaged care as an organizational structure hopes to distribute healthcare more wisely by having physicians review policies that balance the healthcare of the

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Level 1: Allocating resources to healthcare versus other social needs.

Level 2: Allocating resources within the healthcare sector.

Level 3: Allocating resources among individual patients.

individual patient with the goals and costs of providing healthcare to the entire group.

R E F E R E N C E S

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Ltd. 80-95.Decker, Phillip J. and Eleanor J. Sullivan (1988). Effective Management in Nursing, 2nd ed. California, USA:

Addison-Wesley Publishing Company Dranove, D. (2003). “What's your life worth? Healthcare rationing. Who lives? Who dies? And who

decides?” Financial Times. Prentice Hall.Edge, R. S. & Groves, J.R. (1999). Ethics of health care: A guide for clinical practice, 2nd ed. Delmar

Publishers. 19-37Ellis, J. R. & Hartley, C.L. (2007). Nursing in today’s world, trends, issues and management, 9th ed). PA:

Lippincott Williams & Wilkins.Mariner-Tomey, A. (2009). Guide to nursing management and leadership, 8th ed. Mosby. Myers, G. M. (2005). Operational budgeting. Retrieved January 23, 2011, from www.plu.edu:

http://www.plu.edu/~mgtacctg/operational_budgeting.htmMarquis, B.L. and Carol J. Huston (2003). Difference between Leadership and Management in Leadership

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