Hospital Administration Chapters PDF

UNIT 1 INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT Learning Objectives After going through this unit, you will be able to: know the importance and rationale of hospital and Health Care management; understand concept of a hospital and its evolution; understand the roles of a hospital; understand the various types of hospital; understand the challenges faced by a hospital. Structure 1.1 Introduction 1.2 Rationale And Importance Of Hospital Management 1.3 What Is A Hospital? 1.4 Evolution Of Hospitals 1.5 Role Of Hospital 1.6 Classiﬁcation of Hospitals 1.7 Challenges of Hospitals 1.8 Looking Ahead 1.9 Summary 1.10 KeyWords 1.1 INTRODUCTION Hospital-speciﬁc management practices are strongly related to a hospital's quality of patient care and productivity outcomes. For example, research shows that hospitals with higher management-practice scores had better clinical outcomes, such as lower mortality rates from emergency heart attacks, as well as higher levels of patient satisfaction and better ﬁnancial performance. There is a strong relationship between a number of factors and eﬀective management practices which are reﬂected below.  Hospitals with clinically qualiﬁed managers are associated with much better management scores. 01 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT  Higher-scoring hospitals give managers higher levels of autonomy than lower-performing hospitals. Scale and size matter. Larger hospitals are better managed.  When it comes to ownership, private hospitals (including not-for-proﬁts) achieve higher management scores than public hospitals across all countries. Nations are grappling with increases in demand for healthcare as their population's age and expectations rise along with living standards. At the same time, industrialised countries face budgetary shortfalls. As these nations seek to control healthcare costs, an unbalanced focus on “cost” can carry unacceptable consequences; therefore health systems across the developed world are focusing on enhancing quality and productivity. Implementing systemic change is daunting. However improving management practices is a way to raise both quality and productivity. Thus, instilling better management practices could be a key part of addressing diﬃcult challenges. 1.2 RATIONALE AND IMPORTANCE OF HOSPITAL MANAGEMENT So how is the hospital organization diﬀerent from other organization and why there is a need for a separate discipline of Hospital Management to eﬀectively manage these hospitals? Hospital is one of the most complex of all administrative organizations. A hospital does not only mean an institution in which sick or injured persons are treated. Hospitals are the focal points of education and training for the health professionals and also for clinical research necessary for advancement of medicine. Hospitals, moreover has to be also highly responsive to the needs and expectations of Family, Community in addition to the patient. Complexity of a hospital organization is based on the following basic factors:  Here the consumer/customer of the services is a physically/ mentally ill and are rendered services within the four wall of the hospital where patient has no autonomy. This is an unusual situation and present quite diﬀerent problems of management.  Moreover each patient is diﬀerent and Unique. Hence, there is a need for personalized and individualized care. In such a scenario apart from clinical excellence in care, humanitarian, social and professional values 02 | Page assume prominence.  In addition to this, the diagnostic, therapeutic and preventive services provided by physicians, nurses and technicians, and the aid of expensive and specialized equipments and medication have to be tailored to the need of each individual consumer.  Hospitals are knowledge-based organisations, so the human capital of their employees is crucial to success.  Hospital Managers and clinicians often complain that each side speaks a diﬀerent language. Trained Hospital administrator can understand the dynamics of hospital functioning and the clinical challenges better and communicate with clinical staﬀ in a language they understand, enjoy better credibility, acceptance and are viewed as facilitators by the clinicians. Therefore, it requires a thorough knowledge not only of the hospital set-up but also of its meaning, history, classiﬁcation, peculiar conditions prevailing in hospital administration etc. before one can undertake its management. Activity A Discuss the complexity of a hospital. 1.3 WHAT IS A HOSPITAL? Deﬁnition of hospital The word 'hospital' is derived from the Latin word hospitalis which comes from hospes, meaning a host. The English word 'hospital' comes from the French word hospitale, as do the words 'hostel' and 'hotel', all originally derived from Latin. The three words, hospital, hostel and hotel, although derived from the same source, are used with diﬀerent meanings. Initially the term 'hospital' meant “ an establishment for temporary occupation by the sick and the injured.”Today hospital has a much broader scope as discussed subsequently. A hospital is diﬀerent from a dispensary-a hospital being primarily an institution where in-patients are received and treated while the main purpose of a dispensary is distribution of medicine and administration of outdoor relief. As per Medical Dictionary, hospital is deﬁned as an institution suitably located, 03 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT constructed, organized, staﬀed to supply scientiﬁcally, economically, eﬃciently and unhindered, all or any recognized part of the complex requirements for the prevention, diagnosis and treatment of physical, mental and the medical aspects of social ills; with functioning facilities for training new workers in many special professional, technical and economical ﬁelds, essential to the discharge of its proper functions and with adequate contacts with physicians, other hospitals, medical schools and all accredited health agencies engaged in the better-health programme. Blackiston's New Gould Medical Dictionary describes a hospital as an institution for medical treatment facility primarily intended, appropriately staﬀed and equipped to provide diagnostic and therapeutic services in general medicine and surgery or in some circumscribed ﬁeld or ﬁelds of restorative medical care, together with bed care, nursing care and dietetic service to patients requiring such care and treatment. According to the Directory of Hospitals in India ,a hospital is an institution which is operated for the medical, surgical and/or obstetrical care of in-patients and which is treated as a hospital by the Central/state/government/local body/private and licensed by the appropriate authority. WHO deﬁnes hospital “An hospital is an integral part of a social & medical organization the function of which is to provide comprehensive health care preventive, promotive, curative & rehabilitative) and its Outpatient services reach out to the family in its home environment. The hospital is also a centre for training of health workers & bio medical and social research. A close analysis of the above deﬁnitions reveals that a modern hospital has the following characteristics:  It is an institution which possesses adequate accommodation and well- qualiﬁed and experienced personnel to provide services of curative, restorative and preventive character of the highest quality possible to all people regardless of race, colour, creed or economic status;  Which conducts educational and training programmes for the personnel particularly required for eﬃcacious medical care and hospital service;  Which conducts research assisting the advancement of medical service and hospital services;  Which conducts programmes in health education. 04 | Page 1.4 EVOLUTION OF HOSPITALS Hospitals, as recognizable institutions, emerged at diﬀerent times in diﬀerent places, reﬂecting existing social and, especially, religious contexts. The ﬁrst recorded hospitals arose in the Byzantine Empire in the ﬁfth and sixth centuries AD. Hospitals in western Europe emerged later, beginning in the monasteries, a legacy reﬂected in the religious designations of many present-day European hospitals. Most health care relied on extended families and local communities, however, since formal health services had little to oﬀer. The industrial revolution brought enormous social changes that impacted on health and healthcare. The rapid growth of cities provided opportunities for transmission of infections, unsafe factories increased injuries, death rates rose rapidly, and social supports crumbled with increasing population mobility. A combination of philanthropy and self-interest among the wealthy stimulated both public health measures and the construction of new hospitals. However, urban overcrowding and high levels of infection often meant that going into these hospitals actually increased the chance of one dying. By the end of the nineteenth century infectious disease was beginning to be understood. Semmelweis showed that hand-washing could reduce the transmission of puerperal fever. Lister's introduction of antisepsis, coupled with the discovery of safe anaesthetic agents, made elective surgery safer. In England, Florence Nightingale established a professional basis for nursing. Hospitals were now able to oﬀer more than basic care, but their role as a setting for medical treatment was not yet established, and the middle classes continued to have the doctor treat them at home. 05 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT By the twentieth century, the hospital was beginning to take on its present-day role. Advances in chemical engineering laid the basis for a pharmaceutical industry; for example, research on chemical dyes led to the invention of sulfonamides. Hospitals began to oﬀer cure rather than care. As the scope for clinical intervention increased, technology became more complex and expensive. By the 1930s, few surgeons operated on wealthy patients in their own houses. Advances in military surgery in the Second World War had a profound impact on hospital care, with the introduction of safe blood transfusion, penicillin, and surgeons trained in trauma techniques. The greatest changes occurred from the 1970s onwards, however, with advances in laboratory diagnosis and the recognition of new, and often treatable, diseases. The massive expansion in pharmaceuticals transformed the management of diseases and conditions such as peptic ulcer, childhood leukaemia and some solid cancers. New specialities emerged, such as oncology, and common conditions such as peptic ulcer, previously treated with prolonged hospitalization, were managed in ambulatory care. Whole new areas of surgery became commonplace, such as coronary artery bypasses, transplantation of kidneys and other organs, and microsurgery. These advances took place against a background of changing patterns of disease. At least industrialized countries, many infectious diseases were disappearing. General surgeons saw fewer cases of acute appendicitis. Orthopaedic surgeons turned to hip replacements, as a substitute for surgery on tuberculous disease of the spine, or tendon transplants for poliomyelitis. Thoracic surgeons, no longer occupied by tuberculous lung cavities, turned to the surgical management of lung cancer and to open heart surgery. By the beginning of the twenty-ﬁrst century, the work of a major hospital in an industrialized country has been transformed from that of a century earlier. The image beamed into homes throughout the world, in television programmers' such as the North American series ''ER'', is that a 'hospital' means a modern complex in which seriously ill patients are treated at high speed with highly technical equipment and by skilled specialist staﬀ. A patient with a head injury is given an immediate magnetic resonance imaging scan and is seen by a neurosurgeon who has sub specialized in intracerebral trauma. By contrast, a small rural hospital in a middle-income country, providing basic care with limited facilities, could not be more diﬀerent. For this image we can turn to the travel writer, Colin Thubron, who describes a small hospital in 06 | Page Siberia thus: ''Inside the building was a simple range of three-bed wards, a kitchen and a consulting room. It had no running water, and its lavatory was a hole in the ground. Between the double windows the sealing moss had fallen in faded tresses. It was almost without equipment.'' While these two images represent the extremes of the spectrum, there is considerable diversity even within relatively homogenous health care systems. Some hospitals provide high intensity care with specialized back-up from a range of surgical specialities, while others concentrate on less acute care or even convalescence and rehabilitation. From this brief review it can be seen that the survival of the hospital as an institution reﬂects two quite diﬀerent needs. The ﬁrst derives from the rapid growth of advanced technology and clinical specialization. The resources involved, including humans Special Theme – Health Systems and equipment, are scarce and expensive. It is simply not tenable to disperse such resources across a large number of small facilities. This situation is analogous to the growth of the factory in the eighteenth century, driven by the spread of the steam engine, that made the earlier cottage industries obsolete. The second need, to provide care rather than cure, is quite diﬀerent. Care requires people rather than equipment, and generalists rather than specialists. Centralization of services is not necessary on cost grounds, especially since access may be more important for patients and families. 1.5 ROLE OF HOSPITAL The role of hospitals has changed dramatically since its inception. Present day hospitals have multiple roles which are complexly interwoven. The principal role of hospital is delivery of Value-Based Health Care. Factors Responsible For Shaping the Role of Hospitals The Standing Committee of the Hospitals of the European Union (HOPE) considers the following social tendencies as inﬂuential in shaping the role of the hospital. 07 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT  Patients have become more and more educated, autonomous and conscious of their rights; they want a say in their treatment as well in the health care process.  The need of bio-ethical and socio-ethical reﬂection and consultation grows. More and more emphasis is given to primary care and home care.  The introduction of quality in health care industry.  In some countries, political decisions are taken on the role of hospitals and their size or existence, e.g. forbid surgery in smaller hospitals but keep these hospitals for medicine and geriatrics, closing down beds and hospitals, versus obligation for each hospital to oﬀer surgery.  The rise in health care costs under current funding systems is so pronounced that society is having diﬃculty supporting it. The burden is becoming very heavy for families, social welfare and government budgets. The Patient Was Redeﬁned Of all of the developments in healthcare of the past two or three decades, perhaps the one with the most implications for healthcare marketing is the redeﬁning of the patient. By the end of the twentieth century fewer health professionals were using the term patient, primarily because of its narrow connotation. The term patient was being replaced by client, customer, consumer, or enrollee, depending on the situation. The major consideration regardless of the label applied was the fact that clients, customers, consumers, and enrollees all had diﬀerent characteristics than did patients. While the term “patient” implies a dependent, submissive status, each of these other terms implies that the party so labeled is more proactively involved in the provision of his or her care. Healthcare consumers (i.e., patients with the attitudes of customers) were spawned by the baby boom generation and are used to a higher level of service than that typically oﬀered through the healthcare system. They are demanding more attention from practitioners and more of a partnership in the therapeutic process. Ultimately, this development moved healthcare marketing closer to the marketing activities of other industries, as the consumer of the product became, essentially for the ﬁrst time, the focus of the healthcare marketer.  The demographic structure of society is changing (more elderly people needing health care, fewer young people to support this need).  Life style related illnesses are increasingly impacting on the health 08 | Page systems (drug addiction, malnutrition etc.  Patient demands on the health care service increase.  Changing attitude of the health care personnel. They seek more job satisfaction, shorter and more regular hours and higher salaries.  Advances in medical technology (more possibilities and less invasive procedures are provided).  There is a lack of co-operation and coordination throughout the health care sector due to competitive mentality resulting in duplication of services and wastage of resources.  Government wants to introduce new ﬁnancing systems (e.g. DRG) or insurance (e.g. HMO) as an incentive for more eﬃciency.  Introduction of Health Care market systems to increase competition e.g. separation of purchasers and providers of health services.  The number of patients is increasing because of medical progress and at the same time hospital.  admissions are more and more "ﬁltered" (gatekeepers, operation indications, second opinions) leading tp decrease in number of beds.  Introduction of new forms of hospitalization like partial and very short hospitalisation (e.g. day surgery), home hospitalisation.  Division between short-term, medium and long-term care.  Emphasis on shortening of hospitalisation periods.  Concentration of high tech activities in large hospital centers and shifting to low technology hospitals and health care centers.  Pressures on the services of long term or chronically ill.De- medicalisation and simultaneously shifting to more care by nurses.  Economic pressure because of increasing number of chronically ill and at the same time limited ﬁnancial resources. 09 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT Creation of health promotion programmes/Primary Health Care Development of health out-come indicators & Health education.  Change in disease proﬁle, Life style diseases, drug-addiction, diseases caused by malnutrition, diseases caused by pollution, reemergence of drug resistant Tuberculosis, AIDS.  Greater need for training and career development of human resource to ensure retention and continuity of care.  Emergence of new professions. Increased specialisation among doctors and nurses and at the same time more emphasis on the role of the general practitioner. Changing Paradigm in Health Care The changing paradigm is described below: Transformation of the Health Paradigm Old Paradigm Emerging Paradigm Responsibility for individuals Responsibility for the health of deﬁned populations Emphasis on care of acute Emphasis on care throughout the episodes of disease continuum The service providers are essentially Diﬀerentiation based on the capacity equal to provide added value Success is measured by the capacity Success depends on increasing to increase hospital admissions coverage and capacity to maintain people healthy. The objective of the hospitals is to The objective of the network is to ﬁll beds provide the appropriate care at the appropriate level Insurers, hospitals, ambulatory Networks of Integrated Delivery centers, work separately Services (IDS) (Fragmentation) Management of isolated Management of networks organizations Speciﬁc Role of Hospital Based on the above mentioned inputs, a modern hospital has the following roles to play: 10 | Page Centre for Care Of Sick: A hospital should have the requisite diagnostic, therapeutic facilities, infrastructure and functional and proper utility services to take care of sick and injured. Primary Health Care: In the changing concept of health, the role of hospital is not only to treat the sick but to restore his/her Health. Therefore, Hospitals, in addition to their curative role, play an important role in preventive and promoting health. WHO deﬁnes health as "a state of complete physical, mental and social well-being and not merely the absence of disease or inﬁrmity”. Primary Health Care as deﬁned by WHO is “An essential health care made universally acceptable to individuals and families in the community by means acceptable to them through their full participation and at a cost that the community and country and aﬀord at every stage of development”. Thus, hospitals form an integral part in the chain of delivery of Primary Health Care and will be discussed in detail subsequently. Education And Training: Hospital is also responsible for providing continuous training and educational courses for the professional and technical personnel who provide health services (e.g. physicians, nurses, dentists, therapist etc). This is essential for ensuring newer skill acquisition, continuity of education which will lead to better quality of patient care. Research: Research related to various aspects of disease process like, physical, social, demographic, psychological factors as well as drug trials are carried out in hospitals. Disease and Health Surveillence: Hospitals act as a surveillance centre for keeping an ongoing watch over the factors responsible for cause and spread of disease through their reporting and re cording of data related to disease prevalence, incidence, demography etc. Outreach Centre: Hospitals through their OPD services, satellite clinics, ambulatory care canters extend health care services beyond the four walls of the hospital to the community. Rehabilitation: Hospitals have full-ﬂedged physiotherapy, occupational therapy, counselling centers through which they extend their rehabilitation facility. Progressive Patient Care: Hospitals are also an important component of Progressive Patient Care. 11 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT The principal elements of the progressive patient care are as follows: Intensive Care: implies intensive nursing of critically ill patients demanding the immediate availability of skills personnel, life saving equipment and supplies for the revival, restoration and sustenance of their vital functions; Intermediate Care: means moderate nursing of moderately ill patients who may be ambulatory for short period of time. It may be implied to terminally ill patients; Self Care: is primarily educational and supervisory care of convalescent, ambulatory and self suﬃcient patients requiring therapeutic or diagnostic services. Provision for relaxation and recreation is also made; Long Term or Extended Care: is restorative and rehabilitative care of chronically ill patients requiring prolonged medical and nursing care; Home Care: implies preventive and promotive care of the community restorative care of the convalescent at home through the extension of certain hospital services; and Ambulatory or Outpatient Care: means care of the ambulatory patients requiring diagnostic, curative, preventive and rehabilitative services and who are not registered as inpatients in the hospitals. 1.6 CLASSIFICATION OF HOSPITAL Hospitals have been classiﬁed in many ways. The most commonly accepted criteria for the classiﬁcation of the modern hospitals are:  Length of stay of patients (long-term or short-term)  Clinical basis  Ownership control basis Classiﬁcation According To Ownership/Control On the basis of ownership or control, hospitals can be divided into four categories, namely:  Public Hospitals  Voluntary Hospitals  Private  Nursing Homes  Corporate Hospitals 12 | Page Public hospitals Public hospitals are those run by the Central Government, state governments or local bodies on non-commercial lines. These hospitals may be general hospitals or specialized hospitals or both. General hospitals are those which provide treatment for common diseases, whereas specialized hospitals provide treatment for speciﬁc diseases like infectious diseases, cancer, eye diseases, psychiatric ailments etc. General hospitals can diagnose patients suﬀering from infectious diseases, but refer them to infectious disease hospitals for hospitalization, as general hospitals are not licensed to treat infectious diseased patients. Voluntary hospitals Voluntary hospitals are those which are established and incorporated under the Societies Registration Act, 1860 or Public Trust Act, 1882 or any other appropriate Act of the Central or state government. They are run with public or private funds on a noncommercial basis. No part of the proﬁt of the voluntary hospital goes to the beneﬁt of any member, trustee or to any other individual. Similarly, no member, trustee or any individual is entitled to a share in the distribution of any of the corporate assets on dissolution of the registered society. A board of trustees, usually comprising prominent members of the community and retired high oﬃcials of the government, manages such hospitals. The board appoints an administrator and a medical director to run such voluntary hospitals. These hospitals spend more on patient care than what they receive from the patients. There is, of late, a trend among voluntary hospitals to charge reasonably high fees from rich patients and very little from poor patients. Whatever they earn from the rich patients of the private wards, spend on the patients of general wards. However, the main sources of their revenue are public and private donations and grants-in-aid from the Central Government, the state government and from philanthropic organizations, both national and international. Thus, voluntary hospitals run on a 'no proﬁt, no loss' basis. Private nursing homes Private nursing homes are generally owned by an individual doctor or a group of doctors. They admit patients suﬀering from inﬁrmity, advanced age, illness, injury, chronic disability etc., or those who are convalescing, but they do not admit patients suﬀering from communicable diseases, alcoholism, drug- addiction or mental illness. 13 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT There is, however, no uniform deﬁnition for nursing homes. The phrase may refer to out-of-home care facilities that oﬀer a range of services similar to many found in a hospital. These nursing homes are run on a commercial basis. Naturally, the ordinary citizen cannot usually aﬀord to get medical treatment there. However, these nursing homes are becoming more and more popular due to the shortage of government and voluntary hospitals. Secondly, wealthy patients do not want to get treatment at public hospitals due to long queues of patients and the shortage of medical as well as nursing staﬀ leading to lack of medical and nursing care. Corporate hospitals The latest concept is of corporate hospitals which are public limited companies formed under the Companies Act. They are normally run on commercial lines. They can be either general or specialized or both. Classiﬁcation According To Length of Stay of Patients A patient stays for a short-term in a hospital for treatment of diseases such as pneumonitis, appendicitis, gastroenteritis, etc. A patient may stay for a long- term in a hospital for treatment of diseases such as tuberculosis, cancer, schizophrenia, etc. Therefore, a hospital may fall either under the category of long-term or short-term (now known as chronic-care or acute-care hospital respectively) according to the disease and treatment provided. Classiﬁcation According To Clinical Basis A clinical classiﬁcation of hospitals is another basis for classiﬁcation of hospitals. Some hospitals are licensed as general hospitals while others as specialized hospitals. In a general hospital, patients are treated for all kind of diseases such as pneumonitis, typhoid, fever, etc., but in a specialized hospital, patients are treated only for those diseases for which that hospital has been set up, such as heart diseases, tuberculosis, cancer, maternity, ophthalmic diseases etc. 1.7 CHALLENGES OF THE HOSPITAL Signiﬁcant changes have taken place in our social, economic and political institutions, which have made the art of management so complex as to require a considerable degree of specialization. The kind of institution, its size, environment and other variations create radically diﬀerent types of situations and problems of administration. While the science of administration is 14 | Page common to all institutions, the art of its application requires a wide and varied knowledge of that particular type of organization and a varying degree of emphasis on particular administrative skills. A hospital obviously has many organizational and operational elements in common with other service industries like hotels, industrial organizations and educational institutions. However, the diﬀerence between administrative work in hospitals and in other organizations can be attributed to the existence of the following conditions peculiar to hospitals: Challenges The consumers of the services provided in a hospital (the patients) are not healthy individuals. Moreover inside a hospital, the customers feel their autonomy and independence for decision making are compromised. The customers of the hospital (the patients) have individual needs and require highly personalized and custom-made services. The diagnostic, therapeutic and preventive services provided by physicians, nurses and technicians, with the aid of expensive and specialized equipments and medication are tailored to the needs of each individual customer. Also, many of its services are provided continuously, round the clock, every day of the year. All these services involve many stakeholders -the ill customer himself, his emotionally tense relatives and friends, physicians, technologists, clerks and manual labourers. These individuals who are working, suﬀering, eating and sleeping within a comparatively small space and in an unusual atmosphere, highly charged with emotion and tension. Only a very capable administrator can adequately understand and eﬀectively deal with the human relations problems arising from these constraints. Hospital is a typical example of a matrix organization. For example, nurses and certain other personnel must accept direction from both the matron and the physicians under whom they work closely every day. This is an ideal ground for conﬂict and the human relations problems in such situations of dual authority are much more frequent, delicate, varied and complex than in organizations where this situation does not exist. The product of hospital and healthcare services is characterized by the following attributes which makes the task of evaluation based on quantiﬁable standards diﬃcult. 15 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT Intangibility: Services cannot be seen, tasted, felt, heard or smelled before purchase. Inseparability: Services are produced and consumed simultaneously. Heterogenicity: Highly variable and diﬃcult to standardize. Perishability: Services cannot be stored. The demand for services is almost emergent in nature and no two situations are alike. In such a scenario, where one deals with life and death 24x4, hospital staﬀ is expected to maintain a high degree of motivation and a very high level of eﬃciency. The principle of unity of command is grossly violated. The service is rendered to the patient through a team consisting of highly skilled doctors to just literate group IV staﬀ and each group's contribution is vital from patient care point of view. Therefore there is high dependence of service. The hospital is also responsible for planning and operating various training programs. Very few other types of institutions combine such major educational responsibilities with other operating activities. Public relations aspects and problems of hospitals are more pervasive, delicate and volatile. The human elements:  the consumers (patients), producers of care and services (doctors, nurses and other personnel);  the variety of community health agencies, the other competing hospitals;  the people in the community (relatives and friends of the patients);  and the conditions and environment in which they are brought together (the hospital) present public relations problems of a sort and variety vastly diﬀerent from those of most other institutions. Increase in awareness of the patients regarding their rights, the demand and expectations for better service have to be balanced with ﬁnancial viability of the hospital and the constraint of delivering best possible service within the available resources. The eﬃciency and quality of health care services in any hospital is directly dependent on the use of bio-medical equipments. These equipments invariably employ sophisticated technology made of complex systems. Hence, 16 | Page the problem of maintenance and management of these bio-medical equipments is complex because there is acute shortage of technical hands who have suitable and adequate training in the maintenance and repairing of these specialized hi-tech equipments conventional methods of treatment. The introduction of Consumer Protection Act, 1986 and subsequently, the Supreme Court judgment bringing doctors under the purview of this act, Right To Information Act(RTI) Act make the health care providers very vulnerable to litigations. Hospitals in addition to their role of rendering patient care have to battle to maximize proﬁt to ensure ﬁnancial viability. In such a scenario, they have to deal with Medical Tourism, Medical Insurance, and Public-Private Partnership (PPP) etc. 1.8 LOOKING AHEAD During recent decades important changes in our society, as well as in medicine and healthcare systems, have challenged the supply and demand patterns of health services that emerged during the sixties and seventies reﬂecting the medical progress of that time. These changes have inﬂuenced especially the role of the Hospital which has shifted from an institution centred around inpatient areas, towards an impressive development of its specialized diagnostic and treatment services. As a consequence, modern hospitals no longer have inpatient care as their main role, rather they are increasingly becoming centres for specialized diagnostic and treatment of conditions which, only a decade ago, involved a considerable number of inpatient stays. Scientiﬁc and technological achievements, together with the social progress in living standards, educational and economic improvements, are making it possible for many conditions that previously required long inpatient services, to be treated entirely on an outpatient basis, or with a much shorter stay in the hospital, or with a combination of the two. The use of information technology and telematics applied to medicine is allowing now (and much more in the future) the development of communication networks for the transfer of complex graphic information. This will give to patients in remote areas or small healthcare facilities, and even at home, access in real time to referrals to institutions of the highest level of specialization On the other hand, within healthcare systems, hospitals have 17 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT become centres employing thousands of workers, with costly and complex management systems, their budgets are hardly aﬀordable by national economies confronted with other priorities and in consequence pressures on expenditure control and eﬃciency improvements have increased. In summary, many factors point to the need for change in present healthcare patterns whitch, not so long ago, were considered the most suitable:  society, now with better economic and living standards, higher cultural level and increased citizen's participation, demands equitable access to health care of high quality (both technical and humane), delivered without delay and with the best prospects of fast recovery;  scientiﬁc and technological advances, both in medicine and in other ﬁelds, make it now much more feasible to meet these demands of our modern societies;  the need for cost control in healthcare expenditure is forcing policymakers to consider new alternatives for improving health service quality, yet being less of a burden for public budgets ;  ﬁnally, the frequently observed diﬃculty of large service organizations to respond to users' expectations regarding personal aspects of their services, also favours the tendency towards care alternatives that are closer to the citizen and his environment. As a consequence, the shift of hospitals towards patterns of care based on more outpatient, home and short stay services is a change that will also open new possibilities of innovative ﬁelds for the hospital itself and for the healthcare system. Among these new patterns of care the following have special importance:  Major Ambulatory Surgery;  Day Hospital Services, for performing diagnostic tests as well as for medical (oncology, rehabilitation, psychiatry) and surgical treatments (ambulatory surgery);  The so-called "hospital at home" services. All these new services, if adequately provided, are safe, eﬀective and beneﬁcial for patients. 18 | Page Besides, they may have lower unitary costs than inpatient care, and are likely to have a positive impact on the eﬃciency of hospital organisations and the management of health systems. In fact, these new services, if adopted within the appropriate social and cultural environment, will be of beneﬁt to:  patients, through higher quality care, provided faster and with better prospects for recovery;  health professionals, through better co-ordination and communication between hospital doctors and providers in ambulatory care;  hospitals, through the reduction of inpatient days, and the possibility of placing hospital technology and medical specialists closer to the community;  health systems, through overall greater eﬃciency in the use of resources. However, in Europe the expectation regarding the potential of these new services is greater than the actual advances in their implementation. This could be happening because the implementation of these changes often clashes with:  existing patterns of hospital ﬁnancing, often designed to pay for items like 'number of beds', 'length of stay', rather than for the cases treated;  diﬃculties existing in some countries in co-ordinating and/or opening hospitals to specialist and generalist working in private out of hospital practice;  nursing organisation which may present diﬃculties in the development of ambulatory care when hospital guidelines have to be used in the home care setting;  the implementation of these new patterns of services which is not always easily accompanied by the reduction of acute hospital beds (which could be reoriented towards the needs of chronic and palliative care whose demand is growing), and therefore the potential for cost cutting is not achieved;  the lack of social and welfare services which are required to supplement hospital care from within their own resources; 19 | Page INTRODUCTION TO HOSPITAL AND HEALTH CARE MANAGEMENT  the basic and continuing education of health professionals, which does not prepare them for change. In view of the above considerations, the Standing Committee of the Hospitals of the European Union, wishes to make the following three recommendations:  hospitals should encourage and lead a shift towards increasing ambulatory care services, such as Ambulatory Surgery and other similar procedures, Day Hospital facilities and more home care;  This process must include the development of innovative health policymaking and of new management and ﬁnancial instruments for hospitals, as required for the implementation of these new services in each healthcare setting;  The same shift towards increasing ambulatory care services and short stay formulas should be applied in the social and welfare sector, especially towards the growing very old age population. 1.9 SUMMARY The healthcare industry, which is referred to as a crisis industry and a people- intensive sector is perennially hungry for quality people and especially capable administrators. After the IT boom, it is healthcare which is touted as the next boom industry in India. With many hospitals mushrooming all over the place, it is the quality of care which has turned out to be the main diﬀerentiator for today's breed of modern hospitals. Consumer expectations are growing with global exposure; regulations are tightening and consumer protectionism is increasing. The changing paradigm of this industry has made it necessary to understand the functionalities of hospitals. 1.10 KEY WORDS 1. Hospital-It is an institution for medical treatment facility primarily intended, appropriately staﬀed and equipped to provide diagnostic and therapeutic services in general medicine and surgery or in some circumscribed ﬁeld or ﬁelds of restorative medical care, together with bed care, nursing care and dietetic service to patients requiring such care and treatment. 20 | Page UNIT 2 BASICS OF MANAGEMENT Objectives After going through this unit, you will be able to:  Define the basic concepts of management and organization.  State nature and scope and management.  Explain various types of industries and business houses. Structure 2.1 Introduction 2.2 Definitions of Management 2.3 Nature of Business 2.4 Functions of Business Organization. 2.5 Business Industries 2.6 Objectives of Management 2.7 Nature of Management 2.8 Evolutions Of Management Thoughts 2.9 Summary 2.10 Keywords 2.11 Self-Assessment Questions 2.12 Further Readings 2.1 INTRODUCTION An organization is a place where people come together, organize and co- ordinate activity to achieve some specific goal. All organizations whether profit making or non-profit making need to manage their business and direct the various efforts, towards a definite purpose. The globalization process opens doors to multi-nationals which increases competitiveness in the market. To manage the business for customer’s satisfaction is the challenge of this 21 st century. This emerging economic environment forces for quick and effective changes in the business organization. To visualize these changes, right people are needed to be appointed in the organization. Right strategically decisions at right time will help to achieve success. 1|P a g e Management is a process where resources are put at its proper direction to achieve decided goal. Management is a mechanism that constitutes basic functions for accomplishment of objectives. Management is a science that is based on certain principles and functions. Management is integrating function of organizing human resources, with physical resources for better performance and maximizing productivity with available economic resources. Management is a group activity, where numbers of people come together and their efforts are directed towards common objective. Therefore management is a process where 4 basic factors i.e. men, machines, materials and money, are involved. If these factors are managed strategically, the decided objectives could be achieved successfully. Manager operates himself to get things done with the other people those who are working along with him. Manager is a leader, who motivates people working with formal as well as informal communications, interprets the instructions and supervises and co-ordinates their work. Therefore men are treated as most important factor in the organization. As the Herald Koontz and Cyril O’Donnell say, “Management is the art of getting things done through and with people in formally organized groups.” Here Manager needs to control and co-ordinate the activities in a formal way. For this managers use management principles, tools and techniques which are derived by various management thinkers which are universally accepted. Thus, Management has interdisciplinary approaching terms of economical, sociological, mathematical, psychological aspects. 2.2 DEFINITION OF MANAGEMENT Some Definitions of the term Management are given below – Harold Koontz and Cyril O’Donnell- “Management is the art of getting things done through and with people in formally organized groups. It is the art of creating an environment in which people can perform as individuals and yet co-operate towards the attainment of group goals. It is the art of removing blocks to such performance, a way of optimizing efficiency in reaching goals.” William Spriegel :- “Management is that function of an enterprise which concerns itself with the direction and control of the various activities to attain the business objectives.” 2|P a g e George R. Terry :- “Management is a distinct process consisting of planning, organizing, actuating and controlling performance to determine and accomplish the objectives by the use of people and resources.” Dalton Macfarland :- “Management is the process by which managers create, direct, control, maintain and operate their organizations through coordinated, systematic and cooperative human efforts.” Thus, these definitions state that management is a collective activity of a group of people, to reach a specific decided goal or objective. To manage the people is an art. Human mind is a complex element. We need to handle it tactfully,to manage it and direct it for good efforts. So management is the process of getting things done through and with the people. A good leader will coordinate and control activities with cooperative human efforts. It is an art to remove gaps between performances. Various management thinkers have provided tools and principles to solve the problem that arise within the operation and execution level. A good manager will take appropriate decision that would be necessary for the respective situation to carry on the work. Proper and timely decision will prove to be beneficial. Activity 1 Meet one manager or a person who is working as a Team Leader and discuss with him how he manages people working with him? Which tools does he apply to solve their problems? _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ 3|P a g e 2.3 NATURE OF BUSINESS 1. Producing goods and services:- Production of goods like cars, scooters, machines, hardware products, cloths etc. or service products like financial products, goods offered by banking or insurance sectors, software products, would be basic activity of respective business organizations. 2. Distribution and exchange of finished products: - Distribution and exchange of goods produced by manufacturing company for profit making activity. 3. Rendering services to needy people as a social responsibility: - In our country, though it is a developing country, there are number of citizens who need support from the society for their upliftment. Various government and private organizations are working for these people. They provide services for the welfare of the community. There are basically three components of a business : 1. Owner:- Owner is a person or a group of persons, who invests capital and takes risk in profit or loss and dividend. He is liable for unlimited debts in the business. He is responsible to prepare objectives, missions to carry over business. Strategically decisions will be taken by the owner. In sole proprietorship a single person or along with his family is treated as owner. Whereas corporate level stakeholders are also owners of a company. They are decision-makers. 2. Employees: - Employee provides his/her services for a particular business and in return he will receive adequate compensation in the form of salary, bonus, allowances, recreational facilities, etc. Employees are treated as executors. Employee, may be in the capacity of a manager, a supervisor, a worker etc.,is responsible for execution and implementation of strategies decided by owners. 3. Customers: - Customers are patrons of business enterprise. Customer satisfaction is the sole and prime objective of any enterprise. Customer satisfaction lies with the quality products at reasonable price with adequate and regular supply along with good timely services. 2.4 FUNCTIONS OF BUSINESS ORGANIZATIONS 4|P a g e To achieve the objectives of the organization various functions need to be carried out. Those could be grouped as Production, Marketing, Personnel, Finance etc. These functions are inter-related and interdependent. In large organization this activity is generally decentralized whereas in small organization it is a centralized activity. Effective planning, co-ordination, control and execution will ensure smooth functioning of these departments. 1. Production Function: - This is a process where raw material and other resources are put to use. After a process, final product i.e. output will be in the hands. This process is called as production process. Type of product differ as per the type of industry, it may be a manufactured goods or service products. 2. Marketing Function: - Sale of goods produced by production department is undertaken by marketing department. Marketing department is responsible for deciding price of a product. Advertisement, sales promotion through holding any contest or distributing sample copies, market research and taking feedback from consumers for customer satisfaction; are prime activities of marketing department. Marketing person needs to co-ordinate production department as per the feedback received for improvement in the product designed. 3. Personnel Function :- Any organization, though it, is fully equipped with other resources like material, technology, finance etc. without human beings involvement co-ordination among them is not possible. It is a job of management to see whether human needs in terms of work are satisfied. Proper necessary facilities in the working place for men and women have to provide so as to create comfortable working environment. Above mentioned functions are highly dependent on each other. Without production, marketing of products is not possible,whereas marketing department keeps contact with customers through after sales service public relation centers or through market research. Suggestions received from the customers and laymen are forwarded to production department for further improvement. Without human beings no organization could be run efficiently though it is highly technically equipped. 5|P a g e Production Department Marketing Department Personnel Fig 1.1 2.5 BUSINESS INDUSTRY 2.5.1 Basic concept A business industry is a comprehensive collection of businesses of different scales, engaged in varied commercial activities for earning a profit. Particular business industries may be classified by the main activity that the businesses are involved in. The size of a business is typically defined by the number of employees and the volume of annual sales. There are two types of industry- Small scale and Large scale industry. A small business is one that is independently owned and managed. In the US, a business is classified as “small” if it employs less than 50 people and “large” if the number of employees is more than 100. In the European Union, the defining numbers stand at 100 and 250, respectively. According to Indian economy, industry is also broadly separated into public sector and private sector, of which major industrial section is generally categorized as private sector. Industries can be classified on the basis of raw materials, size and ownership. 2.5.2 Types of Industries A.) Primary Industries – Primary industries are those which use natural resources as raw material. This involves the extraction of resources directly from the earth or the universe. 6|P a g e A.1. Extraction Industry: - In this, it extracts out products from natural resources like earth, sun, water etc. Finished goods of these industries are generally used by other industries as raw material. Industries like agricultural industry, mining industry, fish breeding, animal raring power and electricity generation are treated as primary extraction industries. A.2 Genetic industries: - In this business, industry is carried forward by one generation to next generation. It could be animal breeding and animal husbandry, agriculture industry, milk and milk product, food production and preservation etc. B.) Secondary Industry – B.1 Manufacturing Industry: - They carry our production process with raw material or semi-finished goods to transform into finished products. Most of these industries rely on raw material supplied by primary industry or other small scale industries. Factory production is the outcome of any industry. Basically there are types of manufacturing industry. B.1.1 Analytical Industry – In this basic material is analyzed and separated from raw material to process into finished products. Extracted crude oil from the earth and process it for acquiring finished products like petrol, diesel, gas, kerosene, separating iron from iron ores etc. B.1.2 Synthetic Industry –When two or more materials are mixed together some finished product is formed. Fertilizer producing, cosmetics, soap making, cement creation etc. are some of the examples of synthetic industry. B.1.3 Process Industry – Here raw material is processed by considering analytical or synthetic methods. Sugar factories, Textile industry, Iron and Steel industry are some these examples. B.1.4 Assembly line Industry – Here raw material received from small scale industry or primary industry is assembled in this, for example Automobile industry, making watches, electronic goods like TV, Washing Machines etc. B.2 Construction Industry – Construction of roads, dams, buildings, cannels etc. are included under this type of industries. They need 7|P a g e cement, steel and iron, sand, wood etc. as a raw material for construction. Even glass, marble, other decorative stone industries are supportive to the construction industry. C) Tertiary:- Services providing industries are included in this section. C.1 Financial Services –This sector provides services to other manufacturing industries and to the society. Financial products in the form of insurance, deposits, mutual funds, systematic investment plan, etc. are offered to industrial units, as well patrons of the society. Here government and private institutions are established to provide these services. Insurance Companies, Banking sector, Private Financial Institutions comes under this sector. C.2 Educational Services – Basically educational services are treated as noble services, which are imparted for not profit motive. But educational institutes need to be managed properly for qualitative education. Efficient and knowledgeable teachers can only pass on knowledge to next generation. C.3 Information services – This 21st century is called as Information era. There is vast amount of information available in the society. This is most important and tedious task to manage information in a systematic way, so it could be handled effectively. Adequate, relevant and prompt information helps to carry out research. Print and Non-Print medias, Publishing Houses, and now a days internet related institutions are helping to manage these services. C.4 Information and Technology Industry–This is also service rendering industry. This helps, to acquire, process, store and manage data and information with the help of technology like computer software, hardware, programming languages. This processed data is delivered through communication technologies for free of cost sometimes. Database along with hyperlink are providing vast of information across the internet. Information technology along with communication technology is used to develop these services. D. Quaternary Industry – This is an intellectual services providing industry. Research and development work is carried out under this. Research is carried out for the development of human beings. Various research institutes like NCL (National Chemical Laboratory), NEERI 8|P a g e (National Environmental Engineering and Research Institute), IARI (Indian Agricultural Research Institute) etc. are some of the research institutes established by the government. Even research and development centers of pharmaceutical companies, automobile industries work throughout on developing new products. Primary Extraction industry Industry Genetic Industry Secondary Manufacturing Industry Industry Construction Industry Financial Services Educational Services Tertiary Industry Information Services Information and Technology Services Quaternary Industry Fig 1.2 2.6 OBJECTIVES OF MANAGEMENT Goals or objective is a desired future condition that the organization seeks to achieve. Achieving complex and difficult goals requires focus, long-term diligence and effort. Objective is a purpose or the anticipated result that has intrinsic value. Objectives are organizational objectives, social objectives or personal objectives. It can be described as – 1. Organizational Objectives – a. Customer Satisfaction b. Stability and growth of organization. c. Improving goodwill of the organisation. 2. Social Objectives – a. Supply qualitative products and services 9|P a g e b. Follow business ethics in business process. c. Upliftment of underdeveloped people through social responsibilities. d. To increase employment opportunities. e. Conservation of environment and natural resources. 3. Personal Objectives – a. Fair returns for work performed. b. Reasonable working conditions. c. Continuity in employment Activity 2 Frame the objective of your life within next 5 years. Write down steps how you will achieve the decided objective? _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ 2.7 NATURE OF MANAGEMENT A. Management as an art Art is nothing but the application of principles. Art refers to creative skills and talents to achieve the goal. As Harold Koontz and other management thinkers say “Management is the art of getting things done through people.” The human psychology is complicated; need to divert it for qualitative productivity, one needs to manage it properly. As Webster’s Dictionary say “Art is skill in conducting human activity.” Henry Mintzberg is probably the most well-known and prominent advocate of the school of thought, that management is an art. He is an academic researcher, whose work capturing the actual daily tasks of real managers was ground breaking research for its time. Mintzberg, through his observation of actual managers in their daily work, determined that managers did not sit at their desks, thinking, 10 | P a g e evaluating, and deciding all day long, working for long, uninterrupted time periods. He also determined that mangers are engaged in very fragmented work, with constant interruptions and rare opportunities to quietly consider managerial issues. Peter Drucker, a well-known management scholar, is best known for developing ideas related to total quality management. He terms management "a liberal art," claiming that it is so because it deals with the fundamentals of knowledge, wisdom, and leadership, but because it is also concerned with practice and application. Drucker argues that the management attempts to create a paradigm for managers, in which facts are established, and exceptions to these facts could be ignored just because of irregularities. He criticized assumptions that make up the management paradigm, because these assumptions change over time as the society and the business environment change. Thus, management is more of an art, because scientific "facts" do not remain stable over the time. Frederick W. Taylor's, a father of Scientific Management described management an art as - 1. Managers must study the way their workers perform their tasks and understand the job knowledge (formal and informal) workers have, and then find ways to improve how tasks are performed. 2. Managers must codify new methods of performing tasks into written work rules and standard operating procedures. 3. Managers should hire workers who have skills and abilities needed for the tasks to be completed, and should train them to perform the tasks according to the established procedures. 4. Managers must establish a level of performance for the task that is acceptable and fair and should link it to a pay system that rewards the workers who perform above the acceptable level. B. Management as a Science Webster’s College Dictionary defines science as "any skill or technique that reflects a precise application of facts or a principle." Therefore science is a systematic body of knowledge which could be applied derives facts and based on certain principles which are capable of verification that is universally accepted. Science faculty is divided into two criteria’s – 1. Basic & Pure Science 11 | P a g e 2. Social Science. Physics, Chemistry, Biology, Electronics, Mathematics, and Information Technology are some of the branches of Pure Science. These subjects are based on accurate principles. If it is applied the output will be the same universally everywhere. Where as in Social Science it is based on certain principles but output may very according to situation, as it is mostly related with human psychology. Management is a branch of Social Science faculty. F. W. Taylor is known as father of scientific management. He emphasis, his studies in “efficiency in work for better productivity”. For this he laid down certain fundamentals such as accuracy in work, trained person at right place etc. He told decentralization of task is more important. Henry Fayol contributed to management studies with basic principles of management and the “Functional Approach”. He divided all industrial activities into six groups. These activities are important though the organization is small or large scale. Peter Drucker introduced a concept MBO, Management by Objectives which is further modified by Schleh as ‘Management by results.’ W. Edward Deming derived a statistical approach to management with the concept Kaizen. It deals with standardization of operations and activities through Deming cycle, Shewhart cycle, PDCA techniques to meet requirements and increase productivity. TQM technique is a management approach for quality improvement. This approach came from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran. This is based on approach “the customer is always right.”To satisfy this approach, Taguchi Technique has been built by Japanese engineer Genichi Taguchi which is built on basic idea to remove the effects of adverse conditions instead of removing causes. In 1986 Motorola, USA, has developed business strategy ‘Six Sigma’ that seeks to improve the quality of output by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. 12 | P a g e Motivational Theories i.e. Maslow’s Need Hierarchy Theory, Herzberg’s Two-Factor Theory McGregor’s Theory X and Theory Y, Victor Vroom’s Expectancy theory are some techniques pioneer in management faculty. All such techniques developed by management practitioner and thinkers supports that management can be regarded as a science faculty. Management is a process of systematic collection and processing of information for decision making. The processed data is then analyzed and then managers by using their judgment, experience and techniques takes a decision. C. Management as a Profession Webster’s Dictionary of English Language defines profession as, “that occupation requiring specialized knowledge and academic training”. Therefore profession involves some branch of advanced learning or skills. This knowledge is applied as a solution to many problems, takes decisions and executes the plans to achieve decided goal. Thus knowledge of management and a manager, as a working profile, is treated as a high class profession. Characteristics of Profession 1. Systematic body of knowledge – When any occupation is based on the expert knowledge is treated as profession. Expert knowledge possesses principles or techniques, methods of knowledge. This knowledge can be applied to process, execute, and carry the operation of any enterprise. 2. Universal Acceptance –In profession universally accepted theories, principles and techniques are applied for practical working. Methods and principles evolved by management thinkers are universally accepted and are used to base as solution to dilemma. 3. Formal Education – A systematic body of knowledge when acquired through formal education, it can be treated as a profession. Theoretical knowledge supported by short term practical training of management is imparted from recognized institutes in India as well throughout the world. 4. Specialization – Professionals may specialize in a particular field like engineers. As engineers possess specialized knowledge in the field of electronics, information technology, mechanics etc, as even managers 13 | P a g e can choose their specialization as per the interest area like finance, marketing, personnel etc. 5. Code of conduct – Any good profession is always guided by a code of conduct. A manager has to follow professional business ethics, while executing his responsibilities. 6. Independent Office – Many professionals work from their independent office. Some management professionals work as a consultant and practice independently. Their services are hired by other organizations. 7. Fees – Professionals charge fees in the form of consultancy fees or remuneration for the services offered by them, as this management consultant charge fees as against consultancy provided to their clients. 8. Social Responsibility – Professionals are liable to the society. Their work is regarded as vital to society. 9. Work Autonomy - Professionals are autonomous as they can make independent judgments about their work. A professional enjoys freedom to exercise their professional judgment. Even managers enjoys freedom in practicing their knowledge and can make new experiments. 10.Status – Professionals enjoy high prestige and good rewards. Specialized technical knowledge always gains status in the society. As Managers are treated as skilled workers they receive prestige and status for their profession. According to some management thinkers managers are treated as professionals and management is a high class profession. Activity 3 List out various occupations those are accepted as profession. Select any professional person other than manager. Check how his/her work profile could be treated as profession with the help of above characteristics. _____________________________________________________________ ______________ _____________________________________________________________ ______________ 2.8 EVOLUTIONS OF MANAGEMENT THOUGHTS The continued development of commerce and wealth human beings, try to transform their life, where managing life with humanity and professional 14 | P a g e development was considered as prior aspect. While appreciating the past success of ‘management’ we also recognize that today’s accelerating pace of change is putting pressure on our organizations to be at the forefront of management thinking. But our present day management thinking has evolved from a whole range of influences over an extraordinary long period of time. In the comprehensive book ‘The Evolution of Management Thought’ Daniel A Wren writes: “Within the practices of the past there are lessons of history for tomorrow in a continuous stream. We occupy but one point in this stream. The purpose..is to present…the past as a prologue to the future." So with the aim of accelerating the development of our management practice for the future, let us examine that stream of evolving management thought of the past. 2.8.1 Henri Fayol (1841- 1925) A French management theorist was born in Istanbul in 1941. His contribution to management concepts is always remarkable for the industrialization. He has coined five primary functions of management those are - 1. Planning, 2. Organizing, 3. Commanding, 4. Coordinating, 5. Controlling. 15 | P a g e These five points pervaded management thinking in the future. “Command and control” became the slogan for the authoritative style of management fashionable through the 1950s and 1960s, though Fayol’s method was more nuanced than this. His “commanding”, for instance, included energizing employees, while “controlling” included adapting the overall plan to changing circumstances. Fayol thought that management principles could be developed and then taught. Fayol suggested that it is important to have unity of command: a concept suggests that there should be only one supervisor for each person in an organization. Like Socrates, Fayol suggested that management is a universal human activity that applies equally well to the family as it does to the corporation. Fayol's career began as a mining engineer. He then moved into research geology and in 1888 joined, Comambault as Director. Comambault was in difficulty but Fayol turned the operation round. On retirement he published his work - a comprehensive theory of administration - described and classified, administrative management roles and processes then became recognized and referenced by others in the growing discourse about management. He is frequently seen as a key, early contributor to a classical or administrative management school of thought. Fayol was graduated from the mining academy of St. Etienne (cole des Mines de Saint-tienne) in 1860. The nineteen-year old engineer started at the mining company Compagnie de Commentry-Four Chambeau-Decazeville, ultimately acting as its managing director from 1888 to 1918. Fayol has been described as the father of modern operational management theory. Although his ideas have become a universal part of the modern management concepts, some writers continue to associate him with Frederick Winslow Taylor. Taylor's scientific management deals with the efficient organization of production in the context of a competitive enterprise that has to 16 | P a g e control its production costs. That was only one of the many areas that Fayol addressed. Perhaps the connection with Taylor is more one of time, than of perspective. Based largely on his own management experience, Fayol developed his concept of administration. The 14 principles of management were discussed in detail in his book published in 1917, Administration industrielleetrale. It was first published in English, as General and Industrial Management in 1949 and is widely considered a foundational work in classical management theory. 2.8.1.2 Principles of Classical Management Theory 1. Specialization of labour - Specializing encourages continuous improvement in skills and the development of improvements in methods. 2. Authority - The right to give orders and the power to exact obedience. 3. Discipline - No slacking, bending of rules. The workers should be obedient and respectful to the organization. 4. Unity of command - Each employee has one and only one boss. 5. Unity of direction - A single mind generates a single plan and all play their part in that plan. 6. Subordination of Individual Interests - When at work, only work things should be pursued or thought about. 7. Remuneration - Employees receive fair payment for services, not what the company can get away with. 8. Centralization - Consolidation of management functions. Decisions are made from the top. 9. Chain of Superiors (line of authority) - Formal chain of command running from top to bottom of the organization, like military 10. Order - All materials and personnel have a prescribed place, and they must remain there. 11. Equity - Equality of treatment (but not necessarily identical treatment) 17 | P a g e 12. Personnel Tenure - Limited turnover of personnel. Lifetime employment for good workers 13. Initiative - Thinking out a plan and do what it takes to make it happen. 14. Esprit de corps - Harmony, cohesion among personnel. It's a great source of strength in the organization. Fayol stated that for promoting esprit de corps, the principle of unity of command should be observed and the dangers of divide and rule and the abuse of written communication should be avoided. He looked for general management principles that could be applied to a wide range of organizations like business houses, financial or government institutions. He was a great believer in the value of specialization and the unity of command, that each employee should be answerable to only one person or authority. The above 14 principles of management were initially discussed in detail in his book published in 1917, “Administration industrielle et gïale”. It was first published in English as General and Industrial Management in 1949 and is widely considered a foundational work in classical management theory. In 1987 Irwin Gray edited and published a revised version of Fayol’s classic that was intended to free the reader from the difficulties of sifting through language and thought that are limited to the time and place of composition. 2.8.2 Frederick Winslow Taylor (1856 – 1915) F.W. Taylor, a mechanical engineer, was born on 20th March 1856 in Philadelphia. Taylor was a chief engineer at Philadelphia’s Midvale Steel Company, when he introduced time-and-motion studies in 1881, which helped companies, find efficiencies in worker movement and drive out time wasting on the assembly lines. Henry Ford, in particular, put Taylor’s theories to work. Taylor passed away at Philadelphia, Mar 21, 1915. 18 | P a g e Taylor worked as an apprentice at a hydraulic works plant in Philadelphia, in his initial days and then as an unskilled laborer at the Midvale Steel Company where he quickly rose through the ranks to become chief engineer. He earned an engineering degree while holding down these jobs, a rare event for those days. But it was his introduction of new scientifically-based practices that revolutionized the way he and eventually the whole world of management looked at work. While he was working at Midvale, Tayor closely watched how work was done. It was a time of industrial expansion in America. But owners and higher authorities had a little understanding abouthow to manage and motivate their workers. That was the time to assume that incentives and punishments are only two elements to increase the productivity. But Taylor realized that productivity could be increased by measuring both work and people.At the age of 35, Tayor became an engineering consultant and went to work at the Bethlehem Steel Company. Here he was able to introduce a time- and-motion system with cost accounting methods and daily output quotas that would show how his ideas worked. As a result, within a short space of time, production doubled and costs fell dramatically. But Taylor also made many enemies. He described the main reasons that workers were not performing their work at the optimum. He described those as - 1. The belief that increased output would lead to fewer workers. 2. Inefficiencies within the management control system such as poorly designed incentive schemes and hourly pay rates not linked to productivity. 19 | P a g e 3. Poor design of the performance of the work by rule-of-thumb. Frederick Winslow Taylor is known as the "father of scientific management." Many of his theories are too autocratic for today's workplace, but during the early years of the twentieth century, Taylor helped make factories more efficient and productive. His books were known around the world, and he became a symbol of America's industrial power. Perhaps the key idea of scientific management and the one which has drawn the most criticism was, the concept of task allocation. Task allocation is the concept that breaking task into smaller and smaller tasks, allows the determination of the optimum solution to the task. The fear of redundancies within the workforce was a valid argument during the previous style of management. Taylor not only countered this argument by using economic arguments of increased demand due to decreased pricing and put forward the idea of sharing the gains with the workforce. Taylor saw the weaknesses of piece work in the workers reactions to gradual decreases in the piece rate as the worker produced more pieces, by working harder and/or smarter. 2.8.2.1 The main elements of the Scientific Management are – 1. Time studies, Functional or specialized supervision, Standardization of tools and implements Standardization of work methods, 2. Separate Planning function, 3. Management by exception principle, 4. The use of slide-rules and similar time-saving devices, 5. Instruction cards for workmen Task allocation, 6. Large bonus for successful performance, 7. The use of the 'differential rate' Mnemonic systems for classifying products and implements, 8. A routing system, 20 | P a g e 9. A modern costing system etc. Taylor also called these elements as details of the mechanisms of management. 2.8.2.2 He saw them as extensions of the four principles of management 1. The development of a true science. 2. The scientific selection of the workmen. 3. The scientific education and development of the workmen. 4. Intimate and friendly cooperation between the management and the workmen. 2.8.2.3 Time and Motion study Time and motion study is based on systematic observation, analysis and measurement of the separate steps in the performance of a specific job for the purpose of establishing a standard time for each performance, improving procedures and increased productivity. This theory is combination of the Time Study work of Frederick Winslow Taylor with the Motion Study work of Frank and LillianGilbreth. It is a major part of scientific management that can be coined as Taylorism. After its first introduction, time study developed in the direction of establishing standard times, while motion study devolved into a technique for improving work methods. The two techniques became integrated and refined into a widely accepted method applicable to the improvement and upgrading of work systems. Time and motion studies are conducted to document and improve inefficient methods, eliminate or reduce avoidable delays in the workplace, and develop time standards. It is studied with two aspects as – 21 | P a g e 1. Time study – time required by a qualified and well trained person working at a normal working environment to complete a specific task. 2. Motion study- It is a careful analysis of body motions employed in doing a job in order to find the most efficient method in terms of time and effort. Activity 4 Read a book “Cheaper by the Dozen”, list out different activities those have described about save in time and energy. _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ 2.8.2.3.a Steps in conducting a time and motion study: 1. Conduct a Method Study 2. Standardize the Processes and Procedures 3. Conduct a Time Study 4. Establish Standard Time 5. Monitor and Evaluate Changes in Conditions 22 | P a g e Study existing methods Monitor Process the standar- changes disation Time Study Standar- current disation time Fig 1.3 1.8.2.3.bAdvantages of Conducting a Time and Motion Study 1. Eliminate or reduce ineffective movements 2. Facilitate and speed effective movements 3. Eliminate unnecessary work 4. Determine schedules and planning work 5. Determine standard cost and aid budget making 6. Estimate the cost of a product 7. Determine machine effectiveness 8. Determine time standards for establishing wage incentive 9. Determine time standards for estimating labor Taylor was a strong advocate of worker development. It follows that the most important object of both the workman and the establishment should be the training and development of each individual in the establishment, so that he can do the highest class of work for which his natural abilities could be showcased. Taylor's ideas on management and workers speak of justice for both parties. Taylor used to say "It (the public) will no longer tolerate the type of employer who has his eyes only on dividends alone, who refuses to do his share of the work and who merely cracks the whip over the heads of 23 | P a g e his workmen and attempts to drive them harder work for low pay. No more will it tolerate tyranny on the part of labour which demands one increase after another in pay and shorter hours while at the same time it becomes less instead of more efficient." Taylor's system was widely adopted in the United States and the world. Although the Taylor system originated in the factory production departments, the concept of separating planning from execution was universal in nature and, hence, had potential application to other areas: production, support services, offices, operations service industries, etc. A book "The Principles of Management", published in 1911. In this book, he has laid down the core values of scientific management including the rule of reason, the need for management-workers’ co-operation, clear tasks and goals, the careful selection and training of people, and the importance of review. Extraordinarily, all of these principles are still cornerstones of the way, people manage today, whether they adhere to the principles of scientific management or not. 2.8.3 Contribution Of Henry Fayol And F. W. Taylor These both thinkers have contributed to the development of science of management. In this Fayol has been described as, the father of modern operational management theory. Although his ideas have become a universal part of the modern management concepts, some writers continue to associate him with Frederick Winslow Taylor. Taylor's scientific management deals with the efficient organization of production in the context of a competitive enterprise that has to control its production costs. That was only one, of the many areas that Fayol addressed. Perhaps the connection with Taylor is more one of time, than of perspective. According to Claude George (1968), a primary difference between Fayol and Taylor was that, Taylor viewed management processes from the bottom up, while Fayol viewed it from the top down. 24 | P a g e George's comment may have originated from Fayol himself. In the classic General and Industrial Management, Fayol wrote that "Taylor's approach differs from the one we have outlined in that he examines the firm from the "bottom up." He starts with the most elemental units of activity -- the workers' actions -- then studies the effects of their actions on productivity, devises new methods for making them more efficient, and applies what he learns at lower levels to the hierarchy. Fayol suggested that "Taylor has staff analysts and advisors working with individuals at lower levels of the organization to identify the ways to improve efficiency. According to Fayol, the approach results in a "negation of the principle of unity of command”. Some other management scientist viewed it as, “The work of Taylor &Fayol was, of course, especially complementary. They both realized that problem of personnel & its management at all levels is the key to individual success. Both applied scientific method to this problem that Taylor worked primarily from operative level, from bottom to upward, while Fayol concentrated on managing director and work downwards, was merely a reflection of their very different careers”. Fayol and Taylor do have some similar thoughts on certain issues but have different perspective on certain aspects – Table 1.1 Henry Fayol’s aspect Frederick Winslow Taylor’s aspect Hierarchical Fayolanalysed management Taylor looked at management aspect from top management towards from supervisory view point downward. and tried to improve efficiency 25 | P a g e at operational level. Main Developed a universal theory of To improve labour approach of management and stressed upon productivity and to eliminate a theory need for teaching the theory of all type of waste through management. standardization of work and tools. Philosophy A general theory of Scientific management of theory administration. Application It mainly considered function of This theory is based on facts of theory managers and principles of by management and his management wheel are applied principles are mainly even today smooth co- applicable on shop floor. ordination in industries. Focus He studies focused on top Individual worker and machine management and their actions. relationships in manufacturing plants is reviewed in this theory. Theory Derived 5 functions and 14 Time and motion study principles of management. Key Theory is viewed with - It is viewed with – Concepts 1. Planning a. the best way to complete 2. Organizing, production task 3. Commanding, b. Selection and training of 4. Coordinating, workers 5. Controlling c. Co-operation between worker and management. Broader He viewed management as a Its piece – rate system which contribution profession that can be trained equated worker rewards and and developed and emphasized improve worker’s performance on policy aspect at top level and it instilled cooperation management. between management and workers. 26 | P a g e Both the thinkers emphasized on mutual co-operation between employment and employees. But Fayol’s theory is more widely applicable than that of Taylor, although Taylor’s philosophy has undergone a big change under influence of modern development, but Fayol’s principles of management have stood the test of time and are still being accepted as the core of management theory. Activity 5 You must have practiced an activity where in you could saved maximum time and energy and utilized it for another activity and could gain maximum utilization of resources like time and other resources, list out those. _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ 2.8.4 Abraham Harold Maslow(April 1, 1908 - June 8, 1970) Abraham H. Maslow was a American psychologist who is known for his theory that he proposed “hierarchy of human needs”. Abraham Maslow was born and raised in Brooklyn. His parents were uneducated Jewish immigrants from Russia. Abraham Maslow was smart but shy, and described his childhood as 27 | P a g e lonely and rather unhappy, because, as he said, "I was the little Jewish boy in the non-Jewish neighborhood. It was a little like being the first Negro enrolled in the all-white school. I was isolated and unhappy. I grew up in libraries and among books, without friends". Maslow graduated in psychology from University of Wisconsin, where he met his main mentor, Professor Harry Harlow. From 1937 to 1951, Maslow was on the faculty of Brooklyn College. In New York he found two more mentors, anthropologist Ruth Benedict and Freudian psychologist Max Wertheimer, whom he admired both professionally and personally. He described them as "wonderful human beings" as well, Maslow began taking notes about them and their behavior. He wrote extensively on this subject, but especially on the concepts of a hierarchy of needs, Met needs, self-actualizing persons, and peak experiences. 2.8.5 Peter F. Drucker (1909 - 2005) Peter F. Drucker, father of Modern Management, born on November 19, 1909, in Vienna, Drucker was educated in Austria and England and earned a doctorate from Frankfurt University in 1931. He became a financial reporter for Frankfurter General Anzeiger in Frankfurt, Germany, in 1929, which allowed him to immerse himself in the study of international law, history and finance. Drucker moved to London in 1933 to escape Hitler's Germany and took a job as a securities analyst for an insurance firm. From 1950 to 1971, Drucker was a professor of management at the Graduate Business School of New York 28 | P a g e University. He died on in November 2005 in Claremont, California. He was instrumental in the development of one of the country's first executive MBA programs for working professionals at Claremont Graduate University (then known as Claremont Graduate School). Drucker's work had a major influence on modern organizations and their management over the past 60 years. Valued for keen insight and the ability to convey his ideas in popular language, Drucker often set the agenda in management thinking. Central to his philosophy is the view that people are an organization's most valuable resource, and that a manager's job is to prepare and make free people to perform. 2.8.5.1Drucker has pointed out five tasks for managers – 1. Set Objectives – Managers determine what the objective should be, the goals for each objective and what has to be done to achieve those objectives. 2. Organize – Analyze the activities, that need to be accomplished, classify the work and divide it into manageable jobs. Arrange an organizational structure to carry out work and select people to manage those units. 3. Motivate and communicate – Form a team of responsible employees and train them for various jobs. 4. Measurement – Establish yardsticks to measure performance. 5. Development – Improvements to increase productivity. 29 | P a g e Drucker's ideas have been disseminated in his 39 books, which have been translated into more than 30 languages. His works range from 1939's "The End of the Economic Man" to "Managing in the Next Society" and "A Functioning Society," both published in 2002 and "The Daily Drucker," released in 2004. His last book co-authored with Joseph A. Maciariello, "The Effective Executive in Action" was published by Harper Collins in January of 2006. Activity 6 List down title of books authoredby all the management gurus mentioned here. _____________________________________________________________ ______________ _____________________________________________________________ ______________ _____________________________________________________________ ______________ ________________________________________

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