Organizational Restructuring in Healthcare: Functional vs Divisional Organizational Structure

This article discusses the advantages and disadvantages of functional and divisional organizational structures in healthcare. It explores how the Sydney Community Hospital can restructure its organizational structure to provide better services to its consumers. The article also highlights the importance of effective coordination and leadership in healthcare organizations.

Running head: HEALTH SCIENCE
Health science
Nam of the Student
Name of the University
Author note

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Organizational restructuring
Organizational structure refers to the arrangement which determines the method of
organizing an allocating the roles. It also determines the direction of the flow of information
among the several levels of the management. Organizational structure plays a significant role in
enhancing the efficiency of the management so that the ultimate objectives of the organization
can be reached.
In order to create an ideal organizational structure through active participation as well as
shared objectives, several theories associated with organizational structure has been developed.
For instance, classical theories that include the bureaucratic approach ( Weber, 1947), the
scientific management approach (Taylor, 1947) and the administrative theory ( Fayol,1947) are
developed on the basis of task division as well as a delegation of responsibilities. Not only that,
these theories are based on the formation of hierarchical command line along with strategic and
decision making management. Later on, neoclassical theories that deal with loopholes of
classical theories are developed. Neoclassical theories are chiefly based on human relationship,
benefits of groups and participative management associated with the organizational structure.
The organizational structure of Hospitals chiefly involves the management levels which facilitate
the command chain in the department of the hospital. More is the size of the hospital more
complex will be its organizational structure. The basic requirements for effectiveness of the
structure include effective supervision and leadership of the managers and cooperation of the
employees. Considering the fact that the activities handled in healthcare sectors are highly
complex, effective coordination of the employees is highly crucial. In order to deal with the

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complexity, the organizational structure of the hospital prepares a blueprint to plan the activities
that will help the organization to achieve its mission, vision and goal.
The Sydney Community Hospital provides clinical as well as general medical services to
the local community. The organization is currently following the functional organizational
structure since it is helping it to perform well in the market. The functional structure is
represented by a pyramid. The pyramid represents the hierarchy, the individuals associated with
the positions and the function of each of them. The functional structure of larger healthcare
institute often tends to be vertical as it includes as it includes several levels of managerial control
over the organization. Massive range of managerial service is required to provide satisfactory
clinical facilities to the consumers. Apart from being simple and cost-effective, functional
organization structure enhances the efficiency reduces intricate management mechanism
requirements, support career development of the employees and helps the management to take
quick decisions. The functional organizational structure, along with firm line off reporting and
command ensures accountability, effective communication and control environment.
While above-discussed portion demonstrated the efficiency of the functional structure,
there are certain disadvantages associated with the functional organizational structure. If the
scope of service provided by the functional organizational structure is considered then it can be
stated that function structure is not adequate enough for the growth of the mentioned healthcare
organization. One of the major demerits of the organizational structure includes its approach to
considering the top accountable when the tasks are performed by the individuals who are at the
bottom of the pyramid. Besides that, since the employees who are positioned in the lower level
of the pyramid are not considered in the decision-making process of the employees, the
organization, the function structure does not provide enough cope of career development to the

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employees. These negative aspects of the functional organizational structure often result in
conflict among the employees, ineffective authority allocation as well as insufficient preparation
for clinical services. Thus, it can be stated that the mentioned organizational structure is suitable
for smaller healthcare organizations only. For larger organizations, functional organization
structure is inadequate.
Considering the gradually increasing health requirements of the population, SCH should
restructure its organizational structure. The new organizational structure should also be
implemented to providing better pediatric, trauma, cardiovascular and cancer services to the
healthcare service users. Considering the fact that the strategy of the management gets influenced
by the organizational structure, new organizational structure of the SCH organization should
assist the management to develop more effective managerial strategies. These managerial
strategies, in turn, is expected to enable the mentioned organization to attain their mission, vision
and goals along with providing a patient-centred, high-quality care to its consumers.
In order to enhance the consumer loyalty as well as the brand equity of the organization,
SCH should replace their existing organizational structure that is a functional structure with the
divisional organizational structure. The new organizational structure also matches the strategic
objectives of the Company. The divisional organizational structure provides all the benefits of
the functional organizational structure along with the added advantage of diversified control. In a
divisional structure, a separate manager is allotted for each division of the organization. For
instance, a nurse supervisor is recruited by the chief nursing officer of the mentioned
organization for managing the nurses of SCH. These type of management ensures resource
management, effective recruitment, financial control and budgeting services.

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In the divisional structure, the concept of accountability is clear. Divisional managers are
considered to be responsible for any types of inadequacies or issues related to the service of their
own departments. Besides that, since divisional structure involves division of power, employees
are able to access the outcome of their performance effectively. As a result, their confidence and
skills get enhanced due to the mentioned organizational structure. Other benefits of the divisional
structure include the provision of better healthcare to the healthcare service users, career
improvement opportunities for employees, devolution of responsibilities and power, enhanced
clinical and information control, better decision making and finally, better influence on resource
allocation.
While the above paragraphs stated the advantages of the divisional organizational
structure, in this paragraph the disadvantages of the same will be discussed. One of the most
crucial disadvantages of the mentioned organizational structure includes its costly nature.
Considering the fact that this structure involves recruitment of supervisors for each department
and duplication of the facilities and services provided to the employees, the overall cost of
organizations who have implemented this organizational structure gets enhanced. Not only that,
divisional structure is also considered to be expensive since it necessitates an head-quarter
driven, intricate management mechanism. Hence, due to the high cost of implementation of the
divisional organizational structure, this structure is not considered to be suitable for small
organizations.
Considering the fact that the government has taken the responsibility to provide adequate
resources needed by the mentioned organization for retracting its organisational structure, the
high cost of implementing the divisional structure will not be an issue for the mentioned
organization. However, the organization should have strategies to maintain the newly

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implemented divisional structure for sustainable benefits. Therefore, the organization needs to
implement strategies to ensure adequate working capital so that it can support the structure in the
long run. It is expected that with the help of the functional organizational structure, the
mentioned organization will be able to reach its goal that involves providing effective service as
well as quality to the healthcare service users and welcome positive change in both the external
and internal environment of the Sydney Community Hospital.

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Bibliography
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Jeffery Braithwaite, Strategic management and organizational structure: transformational
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