Question

Discuss the 5 of the 2 different types of organizational forms and its disadvantages and advantages:

1. Parallel form
2. Modular form

Based on each definition and textbook examples discuss a pro & con of each form.

Answer 1

Modular form

The concept of modularization represents a modern form of organization, which contains the vertical disaggregation of the firm and the use of market mechanisms within hierarchies.It outsources much work to other organisations and connects them with contracts and electronic information systems.

Modular organization of a hospital :

The focal point of modular organization is the service process of the firm. Any modularization of a hospital must, therefore, be based on the central service process of the hospital: the medical treatment of the patient. The treatment process represents the core process of the hospital, and can be broken down into the partial processes of reception, diagnosis, therapy and discharge, and includes medical and nursing activities.

AGenerally, hospitals are organized internally within clinical departments (e.g. internal medicine, surgery, etc.) and functional units supporting these departments. The clinical departments represent fairly large organizational units as they are allocated a large number of physicians and nurses, hospital beds, associated rooms and other facilities. The organizational structures within the clinical departments are principally functionoriented, and the coordination is carried out by hierarchy. Therefore, the main challenges of modularization in hospitals are breaking the clinical departments down into smaller organizational units, intensifying the process orientation and introducing internal market mechanisms into the clinical departments.

Advantages and Disadvantages:

The use of modular structures in hospitals has a positive effect on hospital performance. The empirical analysis points out, on the one hand, a positive efficiency effect of ‘process orientation’ and ‘internal market mechanisms’, but, on the other hand, a negative efficiency effect of ‘small organizational units’. Taken together, these non-uniform results lead to the conclusion that based on the data analysed in this study, the implementation of modular structures in hospitals is not advisable. The main problem is the negative influence of ‘small organizational units’ on efficiency. The formation of small organizational units is extremely important for the concept of modularization, because it is exactly this feature which distinguishes the concept of modularization from other organizational concepts which also contain pronounced process orientation and the use of market mechanisms within the organization – such as virtualization or network organization.28 Therefore, the central idea of modularization, i.e. that the formation of small organizational units produces positive efficiency effects, cannot be reconciled with the data obtained. For the hospitals surveyed in this study, the formation of small organizational units seems to have negative, rather than positive, effects on efficiency

Parallel form

starts with a functional structure to produce the routine work and then adds a parallel structure to organise for multi-departmental approaches to solving complex problems.

Following the decision to utilize an AR approach with a parallel organization design as the experimental tool, one of the first actions in the investigation was to formulate the focus and the design for the study. After getting the medical director’s support for the initial study proposal, a meeting with the top-level management advisory committee was scheduled. The meeting had a fourfold purpose: first, to introduce the proposed study and its AR philosophy and receive top management input and support; second, to create the foundations or to set in motion a learning climate and coinquiry process; third, to define initially the boundaries, scope, and potential next steps in the creation of the parallel organization; and fourth, to identify the criteria and procedures for the selection of the parallel organization’s members.

Health care institutions face an increased number of forces that are driving them through a jumbled set of difficult changes. In this article, we explored one approach health care institutions can utilize in order to gain more control over the inevitable change process and to cope better with present and future uncertainties. Following a brief theoretical exploration of the parallel organization’s characteristics, an action research effort to implement the parallel organization design in a medical rehabilitation hospital was described. The current body of knowledge on parallel organization designs is limited in both its theoretical and its empirical base. Just emerging from childhood into adolescence, the field requires a much more systematic empirical investigation. The results from this study and from other reported studies provide the initial evidence that parallel organization designs look promising in a variety of organizations. Such parallel organization designs-coupled with the vision of their potential, systematic rigorous research, commitment to continuous experimentation, and participants’ creative energypromise better answers for tomorrow’s uncertainties.

References:

Modular organization and hospital performance Ludwig Kuntz and Antonio Vera Department of Healthcare Management, University of Cologne, Cologne, Germany