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ORGANIZATIONAL PRINCIPLES
AND PRACTICES
DIVISION OF WORK work activities must be
divided among employees in some logical
manner, it should not be specialized that the
employee cannot see the end result of the work
effort
PARITY
of
AUTHORITY
and
RESPONSIBILITY employees should have
authority for assuring the proper completion of
activities they are asked to perform
employee training
employee communications
extent of planning
use of assistance
Organization
General
Manager
Pharmacy
Manager
Accounting
Manager
Rx Dept.
Manager
OTC Dept.,
Drugs &
Cosmetics
Manager
Durable
Medical
Equipment
Manager
Rx Dept.
Manager
OTC, Drugs
and
cosmetics
Manager
Durable
Medical
Equipment
6.
7.
DIAGRAM
ORGANIZATION BY
NUMBER
ORGANIZATION BY
TIME
OWNER
OWNER
Day
SHIFT
Night
SHIFT
ORGANIZATION BY
FUNCTION
Manager 1
Manager 2
Manager 3
15
employees
15
employees
20
employees
ORGANIZATION BY
SERVICE
OWNER
Rx
Dept.
OWNER
OTC
DURABLE
DEPT.
MEDICAL
RX
EQUIPMENT
DEPT.
SNF
ORGANIZATION BY TERRITORY
OWNER
North
South
West
East
HOME
HEALTH
SELECTING an EMPLOYEE
Application Form the easiest method of
knowing the applicants background and
qualifications
Administering Personal Interviews allows
the employer to ask more questions, clarify
existing ones noted on the application form an
simply gain a better general impression of the
person
Checking the Applicants Past any serious
errors or omissions may indicate that the
person is undesirable
Case Study:
David Downing, EVP of South Bay Hospital,, had just been put in charge of a task force to review the
hospital inpatient pharmacys organizational structure. The hospital had experienced rapid growth in
admissions over the last 2 years, and Clark Gusto, the hospitals administrator, felt that such an
assessment was needed. Despite a 38% increase in revenues for the pharmacy, profits had risen only
9% and the administrative expenses had nearly doubled. Both Mr. Downing and Mr. Gusto believed that
the sudden growth had created a variety of operating inefficiencies. Accordingly, Mr. Downing and the
chief Pharmacist were asked to make recommendations on how to improve the pharmacys
organization as first step in an intensive review of every facet of the pharmacys operations. South Bay
Hospital is relatively a small facility specializing in diseases of the aged. Located in the Western United
States, the hospital initially sought only patients from upper-income households. As an exclusive
hospital, admissions were limited despite its location in a wealthy geographical area. Recognizing that
this orientation would not make the hospital profitable, Mr. Gusto decided to reposition to patients from
lower-income households, many of whom were covered only by Medicare. This change increased in
hospital admissions radically. It is also altered the mix of physicians who affiliated with the hospital.
With the increased admissions, Mr. Downing and Mr. Gusto realized that the demand for pharmacy
services well exceeded its initial capacity. As a result, Rx were not dispensed as rapidly as physicians
and patients desired, and a greater number of dispensing errors occurred. To remedy this situation, the
chief pharmacist was instructed to hire more technicians and 3 new pharmacists, one of whom was to
be the assistant pharmacy manager. In doing this, several new problems arose. First, hiring an assistant
manager from the outside caused considerable resentmen5t, and one long- time pharmacist resigned as
a result. Because this person was quite popular, morale problems quickly became apparent. Second, a
number of newly hired employees remained with the pharmacy for only a short period of time. 2 of
these, one a pharmacist and the other a technician, cited the tense atmosphere as the primary reason
for leaving. 3rd while the assistant manager was given authority to make operating and personnel
decisions, some of the more senior employees routinely questioned many of his decisions. This caused
considerable friction. Both Mr. Downing and Mr. Gusto considered this situation a serious threat to the
hospitals future. They felt that they had taken the appropriate steps necessary at the time, but believed
that some corrective action was in order. As Mr. Downing and Mr. Gusto began to examine the
organization of the pharmacy, they realized that the original structure was no longer being utilized.
Accordingly, they attempted to define the actual organization of South Bay Hospital and its Pharmacy. To
the best of their knowledge, a more realistic depiction of the operations was prepared. Nobody was
quite sure how the current structure had evolved, but everyone agreed that it happened more by chance
than by conscious decision. With this framework in mind, they decided to evaluate the current
organization to see if it was more suitable for the hospital and hospital and pharmacy than the one
established years earlier. They also agreed hat changes could be made in the existing structure as
necessary.
Hosp. Admin.
Hospital
Administrator
Original
Organizational
Structure
EVP
EVP
Pharmacy
Hosp.
Services
Chief RPh
PHARMACY
Hosp.
Services
Chief
Pharmacist
Asst.
Mgr.
Pharmacists
Clerks
Actual
Organizational
Structure
Technicians
ER
ASST. Mgr.
Chief RPh
Senior RPh
Older RPh
Asst.
Manager
New
Pharmacists
Technicians
Clerks
ER
Questions:
1. What problems, if any exist in the original
organizational structure of South Bay
Hospital and its Pharmacy?
2. What changes should be made in the
pharmacys
current
organizational
structure?