3.5 Implementation of Strategy
An organization’s strategic direction requires the CEO or president, in combination with the top-level executive team, to work diligently on follow-through, making sure any strategy chosen will be fully implemented. In larger organizations, such as community hospitals, the board of directors follows a more formal or structured process to oversee the development and implementation of strategies prepared by the CEO and executive management team. In other settings, managers may prepare and carry out strategies without such oversight. As a standard planning practice, implementation can be directed by the “five Ws and an H” questions:
Who will direct the implementation of the strategy at the strategic, tactical, and operational levels? A health care manager who decides to incorporate a new service (diversification), such as child care for visitors of patients on both weekdays and weekends, may not oversee the development of the unit. Instead, the manager may assign the task to the individual who will eventually manage that unit.
What is to be done? An implementation program should carefully list and sequence all necessary outcomes. A goal-setting program or planning timeline can establish benchmarks for when each task should be completed.
When should the task start and end? The decision to undertake and implement a strategy only begins the process. Effective strategic management assigns reasonable starting times and completion dates for the major event. Again, a goal-setting program can help develop the time frame for full implementation. In some instances, the strategy may take years to fully complete.
Where are tasks to be performed? In many instances, the primary facility will be the only place involved. In other cases, however, a series of locations may be part of the process.
Why are these tasks needed? Effective implementation includes providing the rationale for the strategic choice to all publics. Each operating unit should have the plan explained to it, along with the reasons for the choice. This provides an opportunity not only for questions and feedback but also for buy-in and participation in the process. When this occurs, morale may increase as employees feel a greater sense of empowerment during implementation.
How are things to be performed? This final element adds in all of the other details. Implementation of a strategy involves the preparation of tactical and operational plans that seamlessly integrate with the strategic direction top management has chosen to pursue.
A strategy outlines the major activity or activities the organization will pursue. Tactics are the plans designed to support strategies (Reilly, Minnick, & Baack, 2011, pp. 41–43). For example, managers in a hospital who have chosen to diversify by adding a wellness center to the hospital’s current services should then devise the tactics that will support the plan and assist in its implementation. In this example, tactics could include the following:
Retaining an architect or facilities manager to create the physical space needed
Hiring a manager to oversee the unit and unit employees (human resources)
Creating guidelines that specify the types of wellness activities involved (medical staff)
Coordinating with other departments (radiology, laboratories, and physicians)
Establishing marketing programs to publicize the new program (marketing)
Setting up fees and payment systems for those who use the program (accounting)
These activities are carried out by managers in the various functions noted here. Once the tasks have been assigned, first-line supervisors can finalize the most specific elements as operational plans.
Managers within each unit of a health care organization, no matter how large or small, devise operational plans to direct their units. An effective strategic management program ensures that operational plans align with organizational strategies and tactics. Three primary operational plans are budgets, projects, and programs.
A budget is an annual financial plan. Strategies often require additional resources or the redirection of resources from one area, department, or activity to another. The accounting manager works in conjunction with managers at all levels to make sure adequate funds have been allocated to any new strategic endeavor.
A project is a plan for a one-time activity. As an example, consider a gynecological practice with three physicians. The organization’s management team decides to diversify by adding urological services. Several tactics would be part of such an expansion. After diversifying, however, the organization may discover that its parking lot requires more spaces to accommodate the additional number of employees and patients. The project involved would be the design, property acquisition, and completion of the new parking area. Once the lot has been finished, the project is complete. For that reason, projects are also referred to as single-use plans.
Programs are sets of projects with an ongoing outcome. A wellness program includes the projects and tactics noted earlier. When the individual projects have been completed (new physical space, advertising blitz), the wellness program can continue in operation. New projects associated with maintenance of the program may then arise over time.
A strategic management program experiences the greatest chances for success when the three levels of planning—strategies, tactics, and operational plans—align with each other. To achieve this outcome, managers must employ various methods that link the levels of planning.
Links Between Levels of Planning
To help ensure that an organization stays on course and avoids drifting from the chosen strategy, managers must formulate various documents that express the organization’s vision, mission, and values over time. Policies, functional-area policies, and procedures assist in keeping the organization on course. Furthermore, various programs, including management by objectives and a means–ends chain, can help the organization maintain its strategic intentions.
Policies, Functional-Area Policies, and Procedures
A nondiscrimination policy is an example of an organizational effort to emphasize diverse hiring decisions and equal patient care.
A policy is a sweeping organizational guideline. As an example, a health care provider may establish the policy that the organization will seek to emphasize diversity in all of its hiring decisions and patient treatment practices by trying to provide services to every element of a local community. Such a directive influences human resources most directly but also affects every other part of the organization.
A functional-area policy translates the policy to an individual function or activity. The diversity program designated by a policy would translate into pricing and accounting practices to help ensure that lower-income groups have access to the facility. The marketing team would try to make sure that the organization transmits the policy clearly to all publics. Human resource efforts to reach minority groups in recruiting programs would become part of the effort to implement and maintain the policy.
Procedures, or task instructions, carry out functional-area policies in individual units. To ensure that low-income patients can afford medical care at a given facility, the accounting team might establish a specific pricing program based on the individual’s annual level of pay. Marketing might include the statement “We are an equal opportunity employer” in every advertisement or communication piece.
Well-managed strategic planning processes integrate strategies, tactics, and operational plans with policies, functional-area policies, and procedures. When these elements stay in sync, individual employees, units, and the entire organization can better pursue the organization’s ultimate objectives.
Management by Objectives
Management by objectives (MBO) is a well-established management system that has been used to integrate levels of planning. MBO creates an annual program designed to facilitate communication and goal setting (Anthony, 1978; Drucker, 1954) and offers a participative goal-setting program to organizational leaders. It begins with individual employees at each rank. The core of management by objectives consists of these steps:
The individual restates the primary emphasis of his or her job.
On an annual basis, the employee creates a list of goals for the upcoming year.
The employee’s supervisor then creates a goal list for the employee.
The employee and supervisor meet and agree to the final goal list for the next year.
At regular intervals throughout the year, the supervisor and employee follow up to ascertain which goals have been met and which still require attention.
Many companies establish the goal-setting program using the calendar year, which means goals are set in December or January and results are examined 12 months later. Other organizations set goals during off-season periods or on a fiscal calendar basis, which may begin in June or some other month. The key ingredient, in many ways, is the fourth step, in which the employee and supervisor meet and agree to a goal list. This participative element can create a stronger bond between the two individuals and lead to greater effort to achieve the established objectives.
MBO integrates company activities through the goal-setting system. Entry-level employees meet with first-line supervisors to establish goals; first-line supervisors negotiate their goals with middle managers; middle managers finalize goals with top-level executives. Each level sets goals that mesh with the goals of those at higher ranks, which helps keep the strategic planning system on track. To attain the highest levels of success, the MBO program should follow the prerequisites or system requirements noted in Table 3.7.
Table 3.7: Prerequisites for successful management by objectives programs
Top management support
CEOs and top managers endorse and engage in the program.
Managers must be able to reward those who achieve their goals.
A systematic approach
Plans are set and goals are measured at the same time each year.
A simple system
A small number of goals (usually fewer than 10) is set to make progress easy to track.
Goals should be difficult but attainable, measurable, clearly stated, and revised when necessary.
Two types of objectives
Employees should establish (1) personal-enhancement goals and (2) goals they pursue on behalf of the organization.
MBO programs take time to establish and refine.
From MBO II: A System of Managerial Leadership for the 80s, by G. S. Odiorne, 1979, Belmont, CA: Fearon Pitman.
The ideal MBO system establishes quality performance incentives for all employees. The best programs make sure that personal-enhancement goals mesh with organizational goals. For example, should an employee establish the goal to become fluent in a second language, that individual becomes more valuable to the organization and should be rewarded accordingly. An employee who successfully achieves an organizational goal should also receive a reward for doing so. Many MBO programs have been successfully adapted to health care organizations.
Another program designed to foster organizational consistency is a means–ends chain. In the system, means are plans, and ends are goals. The ultimate end of an organization—its mission—drives the development of goals at the functional and individual levels, as displayed in Figure 3.1.
As the ends (goals) are finalized, managers then identify the means (plans) needed to reach those goals. The concept of top-down/bottom-up planning becomes the net result of a well-designed means–ends chain. The mission is broken down into smaller and smaller unit goals. At the same time, individual goals build to unit goals, which build to department goals, which ultimately seek to achieve the organization’s mission. The corresponding top-down/bottom-up process helps ensure the consistency of goals and plans at all levels in the organization.
Figure 3.1: A means–ends chain
An organization’s mission is the driving force for its department and individual goals, and it identifies the reason the organization exists.
From Management (p. 140), by A. G. Bedeian, 1986, Chicago, IL: Dryden Press.
Case: Proactive Prevention
St. Mary’s Regional Health Center conducts numerous activities as part of its overall strategic approach to health care. The main hospital offers emergency services, diagnostics, and treatments of all types. The organization operates several facilities in other locations. Recently, St. Mary’s management team, with the approval of the organization’s board of directors, created a new path.
In the past, patients would travel to the hospital or its other facilities when a health problem emerged. Someone who suspected he or she was experiencing heart or cardiovascular issues would be sent to the heart center, a patient diagnosed with cancer would be referred to the cancer treatment center, and so forth.
The top management team, after many long discussions, decided it was time for St. Mary’s to redefine itself. The concept was that members of the community and potential patients of the system should become partners in the health care process. Rather than passively waiting until an illness or injury occurs, citizens of the area should be encouraged to proactively prevent as many health problems as possible.
To help achieve this new strategic vision, the proprietors founded the St. Mary’s Wellness Center. Among the directives for the organization’s new wing were the following:
Provide low-cost health-screening tools, such as blood pressure tests and weigh-ins.
Encourage healthy activities by patrons, including watching diet, managing weight, and exercising.
Offer low-fee programs to help individuals engage in healthy activities, including clubs, exercise groups, and support groups.
Link physical wellness to mental well-being.
Establish an immunization program at low cost for flu shots, shingles vaccinations, and other similar preventive steps.
Creating this new partnership required more than public relations activities and a new building. Physicians in the community were contacted directly and asked to talk with their patients about the wellness program when giving routine physicals and when other contacts took place. Advertising the system and its benefits would take place for the next year. The St. Mary’s Wellness Center would sponsor closed-captioning of the news on two local television stations, which would provide daily reminders of its existence to viewers.
When explaining the new program to community members, two points were to be emphasized. First, real wellness, such as lowering blood pressure, eating fewer fatty foods, watching calories, engaging in mild exercise, and working to manage stress, offers direct benefits to the individual. As time passes, a person who actively engages in preventive steps would be far less prone to endure diabetes, some forms of cancer, heart problems, and other maladies.
Second, the program should assist in cutting health care costs. This benefit extends to both the patient and the hospital. When community members actively work to maintain a healthy lifestyle, they can expect to pay less for health care and lose less time to sick days away from work. The hospital benefits by reducing the need for expensive treatments and recoveries from various illnesses. As one board member put it, “This new vision for our organization cre-ates a win–win situation.”
Write a mission statement that reflects this new direction for St. Mary’s.
Write a vision statement reflecting the new mission statement.
What type of strategy did the leadership team at St. Mary’s pursue?
Which organizations in the community might view the wellness center as a new form of competition?
What factors described in this chapter might affect the implementation of this new strategy?
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