Organizational mergers and health-care changes are rampant in the 21st century.

In health
care today, organizational structures are affected by the economic, political, social, and technological
pressures in society (Marriner Tomey, 2000, p. 231). The structure identifies the authority, the
responsibility, and the decision making processes. Today’s structures are no longer simple and
hierarchical; they are complex systems with cross-functional teams and communications and
interactions occurring at many levels. The structure of the organization is representative of its mission,
vision, and values and how it functions.
Nursing is an integral and major component of the health care organization, with nursing being
the largest group of employees within the health care setting. As a result, it is essential that nurses know
their organization, the structures within which they function, and be able to relate this to their individual
clinical unit. As health care delivery expands, organizations will continuously take on a new look and
approach to structure. By studying and learning the organizational structure, nurses will better
understand their role within it. The nurse is the key person at the bedside, coordinating the care for the
patient. Registered nurses work within a matrix of systems within the health care organization, being a
gatekeeper of information that can improve outcomes for the organization.
In this chapter, the reader will learn about organizational theory and its role; review the
characteristics and the different types of health care organizations; and understand how the corporate
vision, mission, values, and philosophy guide the organization. The chapter also presents information
on governance models, the different types of health care delivery settings, and the importance of
continuity of care for the health of the organization. The chapter concludes with predictive future trends
related to organizations.

Organizational Theory
Organizations consist of groups of people coming together for a common purpose. An
organization can be defined as “a group of persons with specific responsibilities who are acting together
for the achievement of a specific purpose determined by the organization” (Huber, 2000, p. 454). It is
“the structure that supports the organizational processes,” according to Yoder Wise (2003).
Organizations
comprise people who are given specific tasks to complete within their defined job role.
Organizational “theory,” technically, dates back to biblical times, when thought was given to
how groups were organized. Pharaoh utilized theories to build the pyramids of Egypt. Workers were
organized into specific groups with specific tasks to be completed for the success of the structure.
Modern organizational theory began during the Industrial Revolution. Many theories have been
reviewed to demonstrate the how and the what of organizational structure. Today’s view of the structure
emphasizes the relationships of the groups within the organiza tion, the people, and how work is
accomplished in a self organized system (Crowell, 1998).
It is important to understand the different theories of how organizations have come to be
because the theory serves as the foundational component and the driving force for how groups are
formed and function in today’s health-care arena. As we discuss the theories, it will reveal the transitions
and variations that shape organizational functions today. By studying organizational theories, the reader
will understand the functionality of organizational structures.
CLASSICAL THEORY
The Classical Theory, dating to the 1890s, is one of the oldest theories regarding organizational
structure. The focus of this theory was on the structure of the formal organization: it examined the
efficiency of the organization as a by product of the design of the system. The concept was that the
people of an organization will be productive if they are given a well defined task to complete. By
dividing work into tasks and requesting employees to complete the same task every day, the theory
proposed that productivity would increase because of the repetition of the task. This worked from an
industrial perspective.
Results of this theory have come to be known as the classical principles of organizational
design. These principles examine how members are divided into work teams, who reports to whom, the
number of people for whom the managers are responsi ble, and the shape of the structure. From classical
principles, Max Weber, called the Father of Organizational Theory, created the bureaucratic model of
organizational structure. Weber’s model consists of the following components:
1. Organizational structure
2. Division and specialization of labor
3. Chain of command
4. Span of control
The organizational structure concerns the arrangement of the work groups within the
organization and is intended to support the organization’s survival and success. The structure
determines accountability and responsibility. It dictates who makes the decisions and who has authority
and oversight of workers. The structure shows who reports to whom and gives a pictorial view of the
organization. In the Classical Theory, workers were placed into departments in relation to the work they
were assigned to complete.
Specialization of labor dictates that the work of the organization be divided into tasks and
employees be assigned a specific task to complete. Limiting the number of tasks assigned to each
individual increases the efficiency and improves the organization’s product. Just as in an assembly line,
the worker who puts steering wheels on a car every day will become very proficient at the task. The
risk of error is reduced, and efficiency is increased.
Chain of command refers to the formal line of authority and responsibility within the organization.
Authority is the power to guide and direct workers within their specific area. This authority is usually
depicted by vertical lines on an organization chart. This linkage is from the key position on top to the
positions directly below. Responsibility refers to the obligation to produce or to complete the task. Each
worker is responsible to finish the task assigned by a superior.
Span of control refers to the number of employees who report to a manager or a supervisor. A
wide span of control indicates that many employees report to a supervisor; a narrow span means that
few employees report to one. The number of people reporting determines the organizational structure
(Altaffer, 1998). A narrow span of control is indicative of a tall structure because each manager has
only a few people in the reporting structure. There are many managers responsible for a limited number
of people, which results in many layers to get to the top of the organizational structure. There are often
many layers for the change of command, and the span of control is narrow. A wide span of control is
indicative of fewer managers and more reporting workers, resulting in a flat organizational structure.
Many organizations still base their structure on the Classical Theory principles, utilizing some of the
components to make up their structure. As organizations begin to function leaner with limited resources,
other approaches and options to organize the employees are being implemented. The Classical Theory
is based on the concept that the employee does one job and will learn it well. In health care organizations
today, multiple tasks are being man-aged and completed by fewer employees.