In the 1990s, Jeff Pfeffer (Stanford Business School) suggested these 7 “practices” as common themes seen in successful organizations:
- Employment security
- Selective hiring of new personnel
- Self-managed teams and decentralization of decision making as the basic principle of organizational design
- Comparatively high compensation contingent on organizational performance
- Extensive training
- Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels
- Extensive sharing of financial and performance information throughout the organization
The first sentence of the conclusion in his 1998 California Business Review article read, “Firms often attempt to implement organizational innovations, such as those described here, piecemeal.” He went on to say, “Implementing practices in isolation may not have as much effect, however, and, under some circumstances, it could actually be counterproductive.” He’s suggesting bundled approaches are better. Sounds complex, and like a lot of work. Yet, it makes sense: you can hire the right people, provide them with secure employment, pay them well with bonuses tied to organizational performance, be transparent with financial and performance information, and even provide extensive training, but it won’t work unless the work environment and culture fosters self-managed teams and reduces status distinctions.
Within each of these there is a mini-bundle as well. The implication being, if you don’t execute on the details of these practices, you won’t get the desired effect. For example here is the bundle for selective hiring of new personnel:
- Screen for attitude and fit, not for skills that can be readily trained
- Be clear about the most critical skills, behaviors, attitudes – be as specific as possible
- Use several rounds of interviews
- When possible involve senior people
- Continuously evaluate and improve the recruiting process
So, what is the bundle for self-managed teams and decentralization of decision making as the basic principle of organizational design? First the structure must lend itself to teams. In health care, this is often the case given the complex differences across populations of patients, diseases and care settings. The challenge for larger organizations becomes maintaining that local control while ensuring sharing and implementation of best practices in order to reduce counterproductive variation. Second, problem solving is encouraged at the local level from idea generating to ideas testing to hardwiring of the best solution(s). Given the drive for standardization, this local team problem solving can be impeded if standardization is done just for the sake of standardizing. Larger organizations achieve balance by driving accountability at the level of results, and less at the level of process. Third, hierarchical control must be minimized and middle management, especially when not part of a team, reduced. This is hard for many organizations, especially large ones.
Healthcare is at risk because of the significant control IT and finance now have over how teams function. IT through its tight control of information systems, which are now integral to daily work, and finance by controlling costs and FTEs without local knowledge of the daily work, are forcing teams into boxes that don’t deliver the performance ultimately needed. Giving too much control to parts of the organization that don’t have expertise in the core product or service of the organization drives short term and self-serving thinking and action.