The Basics of Management for the Followers of Health Sciences

THE BASICS OF MANAGEMENT FOR THE FOLLOWERS OF HEALTH SCIENCES Jaroslav Zlรกmal a kol.

Olomouc 2016

The Basics of Management for the Followers of Health Sciences

Palacký University Olomouc Faculty of Health Sciences

The Basics of Management for the Followers of Health Sciences

Team of authors

Jaroslav Zlámal, Jaroslav Vomáčka, Zdeňka Mikšová et al.

Olomouc 2016

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Olomouc · 2016

The Basics of Management for the Followers of Health Sciences

Olomouc · 2016

Reviewers: Mgr. Eva Bohanesová, Ph.D. (Faculty of Science, Palacký University Olomouc) Ing. Ivana Valentová (Department of Economics, Moravian University College Olomouc) PhDr. Renata Vystrčilová, Ph.D. (Faculty of Law, Palacký Unviersity Olomouc

First Edition Unauthorized use of the work is a breach of copyright and may be subject to civil, administrative or criminal liability. © Jaroslav Zlámal, Jaroslav Vomáčka, Zdeňka Mikšová, Martin Šamaj, Irena Jedličková, Kateřina Langová, Jana Zapletalová, Jana Bellová, Petr Bačík, 2016 Translation © Jana Bellová, 2016 © Palacký University Olomouc, 2016 DOI: 10.5507/fzv.16.24450285 ISBN 978-80-244-5028-5

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Obsah Obsah................................................................................................................................................... 3 Introduction......................................................................................................................................... 5 1 Introduction to Management .................................................................................................... 6 1.1 History of Management.............................................................................................................. 6 1.2 Summary of the Most Important Schools and Theories of Management ................................. 9 a) Mechanistic Approach ............................................................................................................. 9 b) The Human Relations Movement (Elton Mayo) .................................................................... 12 c) Humanistic approach............................................................................................................. 13 d) The Modern Approach .......................................................................................................... 14 e) Postmodern approach ........................................................................................................... 16 2 Functions of management ....................................................................................................... 17 2.1 Planning .................................................................................................................................... 18 a) The Division of the Planning Process..................................................................................... 19 b) Types of Plans ........................................................................................................................ 21 c) The Process of Planning......................................................................................................... 23 2.2 Organizing ................................................................................................................................. 24 a) Definition of Organizing and Organization ............................................................................ 24 b) Organizational Levels and Range of Management ................................................................ 25 c) Delegation of Competences .................................................................................................. 27 d) Organizational Rules .............................................................................................................. 28 e) New World Trends in the Development of the Organization of Institutions ........................ 29 2.3 Human Resource Management ................................................................................................ 30 a) Styles of Human Resource Management .............................................................................. 30 b) Motivation ............................................................................................................................. 34 c) Maslow´s Hierarchy of Needs................................................................................................ 38 d) Herzberg Motivation Hygiene Theory ................................................................................... 40 e) General Rules for Motivation ................................................................................................ 40 2.4 Decision making process .......................................................................................................... 42 a) Two Factors of the Decision Making Process ........................................................................ 42 b) Elements of the Decision Making Process............................................................................. 43 c) Stages of the Decision Making Process ................................................................................. 44 2.5 Control ...................................................................................................................................... 45 3 Specific types of management ................................................................................................. 47 3.1 Risk management ..................................................................................................................... 47 a) Types of risks ......................................................................................................................... 47 b) Covering Financial Risks......................................................................................................... 49 c) Risk management .................................................................................................................. 50 3.2 Crisis mangement ..................................................................................................................... 52 3.3 Facility management ................................................................................................................ 53 a) Health care supplies .............................................................................................................. 54 b) Catering ................................................................................................................................. 55 c) Medical transport .................................................................................................................. 56 d) Summary of other facility services ........................................................................................ 56 3.4 Other types of management .................................................................................................... 58

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4 Qualifications for a Managerial Job.......................................................................................... 59 4.1 Qualifications for a Managerial Job .......................................................................................... 59 a) Technical and Personal Qualifications................................................................................... 59 b) Communication ..................................................................................................................... 61 4.2 Personality of a Manager ......................................................................................................... 65 a) A Formula for a Successful Manager (by professor Souček) ................................................. 67 5 Human Resources Management .............................................................................................. 70 5.1 Human Resources Management and its Tasks in an Organization .......................................... 70 5.2 Personnel Planning ................................................................................................................... 72 5.3 The Recruitment, Selection and Orientation of Staff ............................................................... 73 5.4 The Rewarding and Motivation of Staff ................................................................................... 75 5.5 The Education and the Development of Staff .......................................................................... 78 5.6 The Evaluation of Staff ............................................................................................................. 79 5.7 Dismissal of Employees ............................................................................................................ 82 6 Health Care in the Czech Republic............................................................................................ 84 6.1 Health Care Systems ................................................................................................................. 84 6.2 The System of Universal Health Care and Social Insurance in the Czech Republic .................. 85 6.3 The Types of Health Care Providing Organizations and Institutions ........................................ 88 6.4 Health Care Policy in the Czech Republic ................................................................................. 89 7 Health Care Providing Institutions in the Czech Republic .......................................................... 95 7.1 Health Care Providing Institutions in the Czech Republic ........................................................ 95 7.1.1 Primary Health Care .......................................................................................................... 97 a) Gatekeeper in Primary Health Care................................................................................... 97 b) Accessibility of Ambulatory Care – Primary Health Care .................................................. 97 7.1.2 Secondary and Tertiary Health Care ................................................................................. 98 a) Accessibility of Secondary and Tertiary Health Care ......................................................... 98 7.2 Environment of a Health Care Providing Institution ................................................................ 99 7.3 The Health Care Providing Organizations and the Quality of Services..................................... 99 8 Quality of the Provided Health Care Services ..........................................................................101 8.1 Management of Health Care Quality...................................................................................... 101 8.2 The Systems of Management of Health Care Services ........................................................... 106 8.3 Quality and Safety Evaluation of the Health Care Services in the Czech Republic................. 109 8.4 Safe Care – Determining Aspects of the Quality of Provided Care ........................................ 111 8.5 Accreditation of the Health Care Providing Institutions in the Czech .................................... 115 9 The Use of Statistical Data in Health Care ...............................................................................122 9.1 The Significance of Statistical Data for a Managerial Job in Health Care ............................... 122 9.2 Basic Methods and Principles of Statistical Surveys ............................................................... 126 9.3 Statistical Studies.................................................................................................................... 129 10 Strategical Management in Health Care................................................................................134 10.1 Basic Terms ............................................................................................................................. 134 10.2 Principles of Strategical Management ................................................................................... 137 10.3 Procedure for the Composition of a Strategy ........................................................................ 140 10.4 The Implementation of a Strategy into a Health Care Providing Institution.......................... 141

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Introduction In connection with the dynamic and quite often turbulent changes in society as well as bearing in mind the aspect of globalization trends that are stronger than ever before, the issue of health care management is getting more and more relevant. The authors compiled the following studying material for those who care to efficiently manage any health care providing institution regardless of its size, health care system or the health care policy in action.

It is clear that based on the vast experience of the authors everyone who would like to be successful in managing a health care institution must have rather a wide range of knowledge not only in medical and non-medical fields but primarily also in economics and management.

A success of any manager in the health care sector can be reached when they combine the principles of intuitive and exact thinking. The knowledge of the basics of management are the minimal requirements for both mentioned types of management. The process of synthesising all of this knowledge can lead the manager to be a top quality strategic manager of a health care providing institution and as a result to reach success. The studying material is designed for a large sphere of followers not only for the students of management but also for active managers or students of other medical or non-medical fields who would like to widen the knowledge in their field and gain information regarding economics and management.

doc. MUDr. Jaroslav Vomáčka, Ph.D., MBA Dean of Faculty of Health Sciences Palacký University in Olomouc

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Introduction to Management

Authors: Jaroslav Zlámal (1.1) Jana Bellová, Petr Bačík (1.2) This chapter is an introductory part of the publication which deals with the history of management, the development of views on tasks and functions of management, it summarises the most important schools and theories of management over the last century and brings it up to date with the contemporary situation. The structure of the chapter is as follows: 1.1 1.2

History of Management Summary of the most Important Schools and Theories of Management a) The Mechanistic Approach b) The Human Relations Movement c) The Humanistic Approach d) The Modern Approach e) The Postmodern Approach

Having read this chapter, you should be able to: ̶ briefly describe the history of management, ̶ characterize the most important schools and theories of management.

1.1 History of Management People are social human beings, they do not live alone, they create groups of people that are interconnected by for example family relations, through work, through relationships with people with the same hobbies and interests, we have our friends, people we know, we live in certain localities, areas that influences us by their climate, location, we live in a country and have to follow given ways to behave and act and so on. Social relations influence our lives from our birth to our death. It can be assumed that since the early history of mankind, at the time of the establishment of the first forms of group cohabitation, at the time of the establishment of the first interpersonal communication in various forms of organization of activities of people came to existence. While it is possible to assume that at the beginning the first forms of organization were of the protection or attack character and primarily economic character (in order to maintain survival), as human society developed together with the increase of civilization elements various forms of organizations came into existence in other spheres of activities of an individual and a community. That how gradually the systems providing safety and improving labour activities of people as well as the systems of education, health care, transport etc. came to existence. The establishment and development of these systems already required a way of organization, government, management of the life of society, hence it actually enforced the establishment of the very institutes, tools for management and in connection with that also a way to pass on the general findings about management, managerial mechanisms, methods, practices and tools.

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An example Archaeological findings document the existence of weapons used for protection as well as for attacks in virtually any historic era. On the other hand, containers for food storage, tools such as knives, bowls, water dishes etc. have been found well preserved and thousands of years old.

The establishment of the division of labour that is a specific specialization of people in order to permanently perform certain labour tasks was the basis for interpersonal management. This division of labour was of two types, we call these a natural division of labour (between men and women) and social division of labour. The later has several stages.

The way of organization has always depended on the level of recognition, on experience, knowledge and findings of mankind, the development of civilization, the level of the society, science and morals. While originally people organized their own life and the life of the ones around them based on experience, as a result of the abrupt development of science and technologies into all areas of the development of society accompanied with a huge expansion in information, internationalization and globalization of the world, social problems, the impacts of modern technologies on humans lives and the role of management not only in the economic sphere but in all of the areas of the society on the global worldwide scale became apparent.

Like any other science also the science about management has been developing and some general principles of organization and management have been updated by new findings, methods, principles that have one common goal: to improve the managerial process, create optimal organizations in order to reach the set goals.

The origin of the term management is connected with a fast change in the relationships in the process of production that were typical throughout the middle ages. If you remember some of the history of mankind you should recall that the production of useful objects was then connected with the existence of guilds. The master (the owners of the workshop) worked in his workshop with several apprentices who thereby gained the necessary technical education and experience straight from their teacher. After the apprenticeship period and gaining work experience the apprentices took guild exams and became masters with the right to set up their own workshops. The master (the leader) hence worked with his workers, apprentices, and there was no need for any other person that would coordinate or manage the whole process of production (or provision of services). With the English industrial revolution, the social structure of the producers changed significantly.

The term “to manage� is then as a social feature a term that is a historical term that has existed throughout all forms of development in human civilization.

Each of the existing eras of the development of mankind was specific by a typical form of organization and management of society. Some civilizations left behind ideological values concerning organization and management, arrangement of society, state and public administration, economic theory of the development of the society, legislation and so on and these are directly connected with the system of social relationships, imagining people and their functions, status in society and generally also the sense of human life; the sense of existence and so on that then projects itself into various philosophical trends of the eras.

The current 21st century society is still based on many of these values, works and ideas. The organization and management as a social matter intervened by their postulates

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into general philosophical, sociological, economic and political ideas, quite often theseare the results of the prevailing social ideas or ideologies applied in reality and in a concrete form they interfere into the relationships among many communities, from the smallest ones up to the large organizations like states.

This is the result why the term management and organization is such a wide term because the whole history of mankind can be viewed as the history of various forms of organization and specific types of management.

In our approach we will further on concentrate only on a concept much narrower and we will view the term “organization and management” only as the terms from a strictly economic point of view connected with production, trade and services that is connected only with an area concerning activities of economic subjects. Within the application to the area of health care we will investigate relationships and managerial structures of health care providing institutions, ways of providing health care and the system of relationships among medics or paramedics themselves, or towards patients or among health care institutions and the state and its institutions.

It was mainly the development of industrial production that caused also the need to look for new and adequate managerial structures, solutions of new complicated relationships concerning coordination among means of production, people among themselves, among companies and economical institutions and so on at the end of 19th century and mainly in 20th century, and these solutions quite often required also mathematical approaches when looking for continuity in rhythm and of the production cycle, chronology of the individual parts of production process and so on. At the same time the development of the science of management was connected with the development of psychological, sociological as well as philosophical findings. The theory of management became intersectional science that uses finding from technical as well as social sciences.

So while the term management is used in the historical general context, the term „management“ is also a new term. All the needs of the industrial reality mainly in the mentioned 20th century stimulated the establishment and development of the theoretical discipline dealing with the problems of organization and management of industrial structures.

It was the development of management and organization of industry that brought the new term “management of a company” as an area for the administration, management and organization of the industrial company.

It was since that period, that is since the onset of the English industrial revolution that we have started calling the processes, ways and methods of management of industrial complexes as “management”.

So the term management is still reasonably new and yet it has been spreading also into another parts of human activities while still enriching itself of new findings and exercising the complex of several social and technical sciences. Currently apart from the general theory of management we also recognize applications into various structures and also its partial forms one of which is the “management of health care” which represents not only the actual process of management of health care but also the system of health care providing institutions and relationships among them.

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An example When talking about the management of culture we mean the system of culture providing institutions consisting of public and private chateaus and castles, public and private galleries, theatres, cinemas, televisions, museum, state monuments and so on. All of these institutions are managed by the Ministry of Culture of the Czech Republic and they have to obey the culture policy of the state, they are provided grants from the state budget and so on.

In connection with the development of the industrial production the findings concerning management have started to be gathered and developed independently in all the industrial countries and in reality almost each of the states in Europe has its own significant representative in the area of the science of management. We can say that as a result of the independent development of the findings mainly in the sphere of production but later on also generally in the areas of such as the functioning of state or public administration the findings and formation of the principles of management have been developing in two directions, a technical direction and a psychological direction.

1.2 Summary of the Most Important Schools and Theories of Management The history of management can be conceptually divided into several eras that lasted each for about twenty years. The biggest progress of management was mainly at the time of the American industry boom and its specific conditions.

a) Mechanistic Approach At the beginning of the establishment of an organization an organizational structure must be designed. That is established in a similar way as mechanical equipment. That is how a system of units, departments and functions is established and their activity is directed by strict rules. The employees are not mechanical parts though. That is why the mechanically designed systems work differently than it was originally planned. The majority of the principles of the mechanical approach is still up-to-date despite many reservations mainly concerning the role of human beings in the organizational system. a1) Bureaucratic Management Theory (Max Weber) The German sociologist Max Weber (1864–1920) is the founder of the bureaucratic theory. Weber´s suggested system of organization was based on the presumption that it is the disobeying of rules set for functioning of the formal structure of the company that is the source of low efficiency. The system enables to increase the efficiency of individual members by the development of essential habits and skills. It is necessary to supress the sources of different approach to the lowest level by identification of oneself with the organization. He assumed that an effective functioning of the organization is assured by the scientific skills of the employees and strict obedience to basic rules. Bureaucracy is a hierarchical type of

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organization designed in order to coordinate activities of many employees and to carry out many administrative tasks and organizational goals.

The Principles of Organization by Max Weber: 1. Formal assignation of rights and duties to every employee. Each worker has a strictly defined area of responsibility based on the position that he was assigned.

2. An executive worker must create stable and order bearing conditions whereby he ensures the effective functioning of the bureaucratic organization.

3. The organization is managed by a system of rules that determine the procedure for carrying out each task. These consist mainly of norms, work descriptions and instructions of how to work.

4. The executive worker acts justly and non-personally in accordance with the norms, rules and regulations.

5. The job assignments in a bureaucratic organization is based on the skills and knowledge with regard to the usefulness of the employee.

6. A democratic control mechanism that prevents dishonesty of the workers is provided.

A bureaucracy that would be perfect can clearly not be found. In reality we could only find an organization that is close to the system of bureaucracy. That is given by the impact of the personal qualities of the individuals such as corruptibility, selfishness and envy. A full elimination of these negative influences is not possible but a solution is to create a system that would limit these negativities.

The disadvantages of the bureaucratic theory of Max Weber are quite clear and linked to the principle of the system. If the rules are applied and their obeying is strictly followed human personal individualities are restricted. The employees are unable to bring their creativity and initiative into the system. Some individuals can rightfully feel restricted by such a system.

An example Would you be able to find types of the bureaucratic management style in any organization nowadays? You surely could. Try to think of and write down your own findings based on your jobs, seasonal jobs, part – time and full time jobs, your friends experience and so on.

a2) Scientific Management Theory (Frederick Winslow Taylor) Frederick Taylor (1856–1915) worked his way up from an ordinary labourer to the leading engineer of a steel company. He focused on streamlining the activities of labourers in the process of production. His ideas were based on noticing significant differences in work performance. He also noticed that the workers who have lower work performance perform many unnecessary actions and that those who have higher work performance are those who specialize in one activity.

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Characteristics of Taylors Scientific Management Theory 1. It was important to set one best way to carry out each individual task based on the time and movement studies. Along with the work performance it was also the performance of the work machine that was monitored and measured. Each operation was carefully measured and the appropriate use of every work tool was evaluated.

2. The selection of the workers was based on scientific criteria, personal qualities such as strength and resistance to tiredness were preferred.

3. Training and education of the workers through which the proper way to carry out individual tasks was provided.

4. It was necessary to improve the cooperation between leaders and employees throughout the introduction of new procedures.

5. The carrying out of the working tasks of the workers was monitored and evaluated with the aim to assess the suitability for the task, obeying the set procedures and gaining the required results.

6. Progressive task wages were established and used in order to motivate the workers to reach a higher performance should they carry out more work than others and at the same time sanctions were set in the case that the required work results were not reached. As a reward, Taylor set the increase in wages in the case of ordinary work by 30% using a premium and based on experience he reached double to quadruple performance results.

In the case of specialized tasks, he increased the wages by 60% and in outstanding cases by 100%.

7. The responsibility was divided between workers and managers. “I don´t expect from you that you would think. Others are paid to think” he used to say to the workers.

The result of the implementation of the scientific management system was almost always a vast increase in labour productivity. On the other hand, the disadvantage of the system was a very challenging and monotonous work and in the case there was a larger labour demand in a given field, people would leave work and the employees were forced to deal with the situation by increasing the wages. Taylor´s system allowed an increase in profits and proved that better management is the way to increase profitability. Taylors theory of management is often called the classical school of management.

An example Would you find nowadays elements of scientific management theory in an organization? Absolutely, try to remember when and where while at work you met an example of the elements of normative work and specify any other elements of your experience.

While in the classical school of management the worker as a tool of production is put at the same level as other tools of production and his activity is analysed and programmed strictly by technological means, the following school of management takes more notice of human psychology during the process of work, the influence of the environment, the shape of the tools and production devices that people work with. Part of this theory are also human relationships, relationships in social groups and similar.

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b) The Human Relations Movement (Elton Mayo) Elton Mayo (1880–1949) was a graduate of a Business School he brought new ideas into the organizational theory of management. He is often considered the ideological founder of the school of the human relations movement. With his co-workers he pointed out the importance of social relationships and work satisfaction for the success of an organization and the work performance of the workers.

In the Hawthorn studies the researchers carried out studies aimed at factors that influence labour productivity. It was mainly the physical aspects and working conditions such as the intensity of lighting, noise in the work place, temperature and humidity that were analysed.

These studies brought interesting results. The increase in the intensity of the lighting led to an increase in the performance of lady workers. What was surprising, the performance did not decrease should the intensity be lowered again. An unexpected result was also the growth of performance that appeared in the control group where no changes were made. When a group of workers was allowed to take over part of the responsibilities in the organization of work, it also led to an increase in production. The same effect was in the case of the increase in wages.

In the control group where no changes were made the growth of productivity appeared as well.

It was really very difficult to clarify why the same effect happened with the group where no changes in working conditions were made. The explanation was in the fact that the classical school of management omitted. That is the proudness to be a member of the work group and the feeling of belonging to the work group. That was represented by the feeling of the workers who took part in the research and felt that they are more important than other workers and that the management is interested in their needs and they tried to prove that they are worth such attention and that they are a good work group. The increase in performance as a result of being selected into a research project is even nowadays called the Hawthorn effect.

The human relations movement emphasises on the interpersonal relationships as the most important motivating factor that it is stronger than individual goals of the workers and then the goals of the organization. The human relations movement teaches how the managers should treat their subordinates and notice them and take an interest in their problems. This way of motivating the subordinates developed very quickly in the USA. It was literally a fashion to call people by their first names or friendly pat shoulders within the work group.

This way of work behaviour was not so popular in Europe as it was viewed with certain perplexity and embarrassment because the suspicious European worker often considered this yet another trick of the cunning capitalists.

An example Human performance at work as well as home is significantly influenced by the environment like, for example, the colour scheme, noise, size of the room and other conditions. The colours for example lay on a certain scale (Likert scale) starting with the warmest ones leading to the coldest ones, also the noise can be monitored and put onto a scale starting with the mildest and leading to an unbearable one. Some colours affect people not only physically (warm and cold colours) but at the same time also psychologically (joyful colours cause joy, cold and dark colours make people feel depressed). The colours influence work performance, pleasant environment makes people work better.

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c) Humanistic approach During 1940´s and 1950´s interest started to be focused on people and their development.

Instead of the social motivation that was emphasized by Elton Mayo, it is the satisfaction from the personal development of the individual that is considered the main work stimulus. c1) Theory X and Y (Douglas McGregor) Douglas McGregor (1906–1964) aimed to study the opinions through which the manager perceives the human essence, his work motivation and the corresponding managerial style of people. He characterized the prevailing view on human management in organizations as theory X. The basic presumptions of theory X are the following: 1. People are essentially lazy and they try to avoid work.

2. Because people do not like working they have to be forced to work by the system of rewards and punishment and during work time they have to be controlled.

3. The workers avoid responsibility and they like being managed.

4. There is a small group of people that those do not apply to. Those are called on to manage and control others.

Against this traditional view on people at work McGregor stood up the humanistic theory Y which presumes the following: 1. Work is just as natural activity for humans as entertainment or rest.

2. Humans like accepting independence and responsibility.

3. The ability to make one’s own decisions is widely spread in the population; it is not only a matter of a few individuals.

4. Current organizations do not use this human potential, they try to control and steer.

5. The identification with the goals of the organization is proportional with the amount of reward.

It is obvious that the theory X is rather pessimistic and the employees are directly managed by the superior and on the other hand theory Y is more flexible and aimed at the use of the personalities of the individuals and their integration into the organization. In conclusion it can be said that these theories tend to reflect extreme situation that can hardly be found in reality. It is worth considering which of these approaches to use as a manager as each of these extremes has its advantages as well as disadvantages. Various situations require various approaches.

An example Often various studies are carried out aimed at finding out how the employees react to over control and the direct managerial style. These can result in a complete loss of interest in work, demotivation and frustration. As a result, these people focus on other activities or show negative reactions. An example can be an effort to avoid work and others. The management tries to resist these efforts by stronger control and as the result of this decision is that stronger negative reactions are caused. Similar behaviour then only widens the gap between management and workers.

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