Question

How is the design of a program will be influenced by the regulatory environment in which the organization operates? Some jurisdictions are quite prescriptive, requiring Certificate of Need submissions for major projects and even (in the State of Maryland) mandating hospital reimbursement rates. In other places, market forces are left to drive healthcare. What are the relative merits of these divergent approaches?

Answer 1

Factors Impacting Organizational Design

• identify aspects of the external environment that influence the design of an organization’s structure.
• Identify aspects of the internal environment that influence the design of an organization’s structure.
• Explain how business growth cycle affects organizational choices.

External Environment

The first factor to influence an organization’s design will be that of the external environment. The external environment consists of everything outside of organizations that can affect their performance and outcomes. Availability and need for raw materials, human resources, and financial resources are elements of the environment. Further key elements include customers and suppliers, competitors, cultural factors, and the types of regulatory frameworks or governmental influences on the organization.

The greater the number of external forces, the greater the complexity of the external environment. A pharmaceutical company operates in a very complex environment dealing with many groups such as doctors, hospitals, pharmacists, external research establishments, regulators, health insurance providers, labor markets, and many suppliers. In addition, a pharmaceutical company would deal with these groups in many countries with varying local economic conditions, health care arrangements, and regulatory regimes.

Environmental stability refers to how stable all of the environmental forces are over time. There was a time when certain external forces were considered stable, such as governmental regulations and laws, which could continue for many years, even with new political administrations in place. However, the financial crisis of 2008 and political changes in the United States have added volatility. The high-tech and software industries would be considered unstable because of the relative ease for new software and technology companies to enter and take over an existing market.

Internal Environment

The internal environment is influenced by the jobs and the employees as they relate to those jobs. The employees’ influence on the internal environment is directly related to their level of engagement, or job satisfaction. The job characteristics model, proposed by Richard Hackman and Greg Oldham in 1980, proposes that the right combination of skill variety, task identity, task significance, autonomy, and feedback can lead to high-quality performance, high internal motivation, and high satisfaction.

Skill variety: This is the degree to which the job requires a person to use multiple high-level skills. A department store greeter whose job consists of greeting customers and giving them a shopping cart demonstrates low levels of skill variety, whereas the employee who acts as a cashier, stocks shelves, and manages the inventory of outdoor furniture demonstrates high skill variety.

Task identity: This is the degree to which a person is responsible for completing an identifiable task from start to finish. A graphic designer who creates images for a website might have low task identity. This is because the designer’s work is only part of a larger whole; other designers and coders contribute their work to completing the website. However, a graphic designer who creates a brochure for a client from the idea phase to the final proof will have a high task identity.

Task significance: This is the degree to which a person’s job affects customers or other people’s work. A nurse handling the diverse needs patients in the intensive care unit may score high on significance, whereas new nurses aiding in the same department may feel that they perform only busy work and feel a low level of significance.

Autonomy: This is the degree to which a person can decide how to perform his or her tasks. For instance, a grocery store clerk who is given a list of tasks to complete by the end of the day has greater autonomy than a clerk who is given that same list and told that the list needs to be completed in a particular order, with certain tasks needing to be done by certain times of the day.

Feedback: This is the degree to which people learn whether they are doing their job well. Feedback may come from other people, such as managers, peers, subordinates, and customers, or it may come from the job itself. For instance, a customer service representative might receive feedback from a supervisor, as well as from the customers he or she has tried to help.

Taken all together, the job characteristics model links the task itself to employee motivation. More specifically, a job that is challenging will improve employee motivation but a job that is boring and repetitive will hamper employee motivation. To make a job challenging, managers can ensure the following:

• There are a variety of tasks for the employee to complete.
• The employee feels a sense of autonomy.
• The employee is empowered to make certain decisions.