Strategic Leadership in Hospital Non-Profit Organizations - Term Paper Example

?Strategic Leadership in Hospital Non-profit Organizations The purpose of a non-profit organisation for example a non-profit hospital is to meet one or more needs of the society. For a hospital, it would be expected that it meets the healthcare needs of the society, offer social benefits and help the society improve its general health conditions. However, there arise issues and challenges in the management of such an organisation that does not distribute profits. Such challenges are usually experienced in its financial management, budgeting, mission, and leadership. Managers of non-profit organisations need some management skills unique to them. These include governance, volunteer programs, fundraising and granting, non-profit budgeting and accounting and public policy skills. Problems with leadership, mission, budgeting and financial management in hospital non-profit organizations Budgeting and financial management According to Goodman and Pennings (1997), non-profit organisations require highly customised forms of budgeting. The problem is that these budgeting skills are not taught in general management learning institutions. Non-profit hospitals have to fix their long list of needs within the limited pool of resources available in an attempt to achieve its objectives and meet the needs of the society. This is because the finances received by non-profit hospitals in most cases are low below what they need for effective service delivery. This attempt to satisfy everything for the sake of everyone usually results to ineffectiveness in non-profit hospitals (Bernd et al, 2004). Non-profit hospitals can operate as donor-faced, community-faced or agency-faced. Those that are donor-faced or agency-faced have to be very ken not to annoy their financiers so as to ensure their continuity. This means that the hospital organisation have a hard time in ensuring that no-patients overstay in the hospital so as to keep their financial expenses within the expected limits. Any such occurrences usually brings a lot of losses to the hospital unlike a profit making hospital in which patients pay for their medical and general expenses (Bernd et al, 2004). A budget should reflect the expected expenditure verses expected income as well as act as an executive control tool. However, in non-profit organisations, budgets are usually drawn just for formality purposes. Non-profit hospitals use non-scientific finance budgeting methods. These methods lack scientific calculation and analysis. Such methods do not take into account changes expected in the hospital environment. As a result of this, such budgets are not in a position to exert the required financial control in the hospital (Forbes, 1998). Non-profit hospitals are usually exempted from taxes. This has a disadvantage in that they are not allowed to access equity markets. This becomes a big challenge when the hospital needs capital to fund its projects because it blocks their ability to get capital from multiple channels. This means that the management has to greatly reduce expenses in other areas so as to get capital to fund the new project. Consequently, this impacts on the quality of services offered. Narrowed financial channels usually present a rick of financial crisis in non-profit hospitals. Alternatively, the hospital can opt to wait for donor funding for the project yet such funds could not be forthcoming in the near time (Bernd et al, 2004). Non-profit hospitals lack organisation and highly skilled personnel for its financial management. These cause them to lack the concepts and experiences of advanced enterprise financial control. At the same time, some non-profit hospitals lack clearly defined financial objectives in their management. These hospitals have to ensure that their mission to offer social benefits does not overtake the reality that a hospital is a market economy. Non-profit hospitals usually encounter a problem of investment in the course of their financial management. Many at times, there is blindness in investing the capital acquired. For example, there is lack of needs analysis leading to the purchase of large-scale medical equipment. This eventually results to waste of resources (Roberts and Scapens, 1985). Mission and Leadership Non-profit organisations usually use their own financial measurements in measuring their performance. These strategies are usually inadequate and do not tell much about long-term value creation in the organisation. As a result of this, it is usually difficult to measure if the hospital has had an impact on its mission. According to Oster (1995), most of the non-profit hospitals have clearly spelled out mission statements which represent accountability between them and the society. However, the lack of a good performance measurement tools makes it hard for them to know if the management strategies they are applying are succeeding or failing them. This calls for the introduction of a new management system in non-profit hospitals so that they can achieve all that is stated in their mission statement (Sheehan, 1996). Many of the workers employed by non-profit hospitals accept salary or compensation rates lower than those found in the general labour market of similar kind. This is a source of strength but on the other hand, it poses a danger in the attainment of the organisation’s mission statement (Connolly et al, 1998). Non-profit hospitals usually experience dual leadership patterns. Executives in such hospitals assume more than a central role in governing the hospital. However, a challenge usually arises in negotiating and defining the roles of such individuals. Over the years, paid staff members have been introduced into non-profit hospitals so as to perform senior management roles. This is called professionalization. Professionalization presents a problem in defining the boundaries of the paid and voluntary teams in the governance and management of the hospital. This professionalization has also led to potential conflicts in the non-profit hospitals in regard to who has more power and influence in decision-making in the hospital. Decision making between staff and board is also increasingly becoming difficult as a result of professionalization of the non-profit organisations like hospitals. This is an area that has to be handled with care because some of the workers are volunteers yet they their services determine if the mission n will be achieved or not (Goodman and Pennings, 1997). Conclusion There are more leadership, financial and budget problems encountered in the management of non-profit hospitals. This requires that managers of such organisations be well equipped with strategic leadership skills so as to enable them to cope with the expected challenges. Such leaders should also undergo continuous induction to update them on the relevant management skills they need especially in ensuring harmonious existence between the paid and voluntary teams and proper financial management. References Bernd,H. Marc, J. and Irvine, L. (2004). “Challenges in Managing Nonprofit Organizations: A Research Overview” Voluntas: International Journal of Voluntary and Non-profit organisations. Forbes, P. (1998). “Measuring the Unmeasurable: Empirical Studies of Nonprofit Organization Effectiveness from 1977 to 1997.” Nonprofit and Voluntary Sector Quarterly. (2) pp 183–202. Goodman, S., and Pennings, M. (1997). New Perspectives on Organizational Effectiveness. San Francisco. Jossey-Bass. Oster. S, (1995). “The Mission of the Nonprofit Organization,” in Strategic Management for Nonprofit Organizations: Theory and Cases, Oxford: Oxford University Press. Roberts, J. and Scapens, R. (1985). “Accounting systems and systems of accountability: understanding accounting practices in their organizational context” Accounting, Organisations and Society. (4) pp 443-456. Sheehan, R. (1996). “Mission Accomplishment as Philanthropic Organization Effectiveness: Key Findings from the Excellence in Philanthropy Project.” Nonprofit and Voluntary Sector Quarterly, (25) pp 110–123. Read More