LUNA GOCO COLLEGES, INC.

DEPARTMENT OF NURSING
NURSING LEADERSHIP AND MANAGEMENT
MODULE 6
STRATEGIC PLANNING IN NURSING ORGANIZATIONS
Objectives
After working on this module, you should be able to:
1. Define and explain the purpose of strategic planning;
2. Explain the role of organizational culture in strategic management;
3. Describe the health care environment;
4. Discuss the context of strategic planning;
5. Discuss the interactive ABCs of strategic planning;
6. Explain the strategy change cycle;
7. Discuss the benefits of strategic planning; and
8. Describe the common pitfalls in strategic planning in health services.
As a response to rapid changes in the local and global health scenarios, such as shifting priorities, migration
of nursing professionals, erratic funding of health care services, and varying payment schemes for health
and nursing services, health service administrators and managers are forced to examine the goals of their
organizations and to reassess the appropriateness of their management strategies.
This brings us to one of the most important skills for nurse managers and administrators: organizational
planning.
There are two types of organizational planning: strategic planning which is long-range (usually 3 to 5 years)
and operational planning which is short range (usually monthly, quarterly to yearly). It is important for nurse
executives, managers and administrators to understand the process and mechanics of organizational
planning because the environment in health care organizations today require from management people
diligence and acumen in business planning that entails some risk taking and skills in negotiation.
Definition and Purpose of Strategic Planning
Bryson (1995) defines strategic planning as “a disciplined effort to pro- duce fundamental decisions and
actions that shape and guide what an organization (or entity) is, what it does, and why it does it.” Strategic
planning starts with an in-depth analysis of the organization’s internal strengths and weaknesses and the
external opportunities and threats so that responsive, doable goals can be set for the future. It may extend
three to five years into the future, Strategic planning determines the path the organization will take, assigns
responsibilities, and determines time frames for attainment of set goals.
Strategic planning is a process undertaken by organizations to determine their future by proactive
modification of the internal organization as well as of the external environment. The effective nurse
executive/manager/ administrator must contribute to choosing new directions and new strategies for the
organization. This new set of directions and new strategies constitute what is referred to as vision.
Development of a strategic vision involves “analysis of the organization’s environment, capabilities and re-
sources; development and articulation of a conceptual image; clarification of values; development of a
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DEPARTMENT OF NURSING
NURSING LEADERSHIP AND MANAGEMENT
mission statement; identification of goals and objectives; and identification of strategies for reaching the
goals” (Marriner-Tomey, 1996). Other authors would add that the organizations need a vision that is realistic
and feasible, clear, cohesive, consistent, and flexible.
The Role of Organizational Culture in Strategic Management
The organizational culture, which consists of the shared values, corporate heroes, rituals and cultural network
of the organization, guides the internal workings of the organization.
Values are the basic concepts or the beliefs of the people within an organization. These are also the basis
of the organization’s philosophy. They also provide a common sense of direction for all members of the
organization and guidelines for their day-to-day behavior. Values act as informal control systems that tell
people what is expected of them. Likewise, values guide management in setting priorities for corporate goals
and objectives and strategies for achievement.
Heroes refer to role models who symbolize the organization to the external environment.
Rituals and rites are the programmed routines of day-to-day life in the organization. They show members
the kind of behavior that is expected of them and the rewards to be gained for outstanding performance.
Cultural networks are made up of communication patterns through-out any organization, carrying beliefs
and values across all levels of the organization.
Hickman and Silva (1984) recommend that to build and maintain a corporate culture that facilitates strategic
management, managers (and administrators) should focus on three areas:
1. Commitment-employee commitment to a corporate philosophy must coincide with both individual and
collective interests
2. Competence-should be developed and rewarded in key areas
3. Consistency-in commitment and competency by attracting, devel- oping and keeping the right people.
The Health Care Environment
Rapid expansion of the health care system and increasing specialization have resulted in many different
types of health care organizations. Health care providers and services have been classified as inpatient,
outpatient, community based, institutional, governmental, hospice, health maintenance organizations,
centers, cooperatives, ambulatory care and physician’s clinics.
A significant trend In the health care industry is that health care services are moving toward the client. There
are many health providers today who are taking their services to the consumer (through satellite clinics,
outpatient surgical centers or day surgeries, free standing diagnostic units, community outreach programs,
mobile medical clinics, complete with a physician to make house calls, and health centers in shopping malls).
Nurse managers/administrators must view the health care environment with the intent of understanding the
nature of changes taking place in technology, social issues, regulation, political attitudes, economic realities
and competition. Focusing attention on these major change areas facilitates the early identification and
analysis of industry specific environmental issues that will affect the health care organization where they
belong.
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DEPARTMENT OF NURSING
NURSING LEADERSHIP AND MANAGEMENT

The Context of Strategic Planning

Strategic planning is, a universal process, and therefore many of the approaches and techniques cited ask
for basically the same information and inputs. What is important to remember is that the underlying process
and goal of strategic planning is to identify the strengths and weaknesses of the organization vis-à-vis the
opportunities and threats of the environment.
An environmental assessment (also called situation audit) is done to scrutinize the past, current and future
forces that affect the organization. External stakeholders like advocacy groups, government officials, and
representatives of medical insurance companies may be invited to give their inputs. Also included in the audit
are the articulated concerns and expectations of members and staff of the organization.
A grid can be used to show the situation audit. As described by Marriner-Tomey, the past, present and future
are represented on the horizontal axis. Clients, competition, market share, environmental demographics,
economic, legal, political, technological resources (facilities, financial, and human resources) and other
criteria are represented on the vertical axis.
The SWOT analysis can be presented using the four quadrants corresponding to the four categories, namely:
internal strengths, internal weaknesses, external opportunities and external threats. Each quadrant is labeled
as one of the four categories, with a listing of the identified factors to “show a bird’s eye view of the situation
audit.”

Internal strengths Internal weakness

External opportunities External threats

When the situation audit is accomplished, the management team develops the purpose or mission statement,
writes the organizational goals and objectives, plans the strategies to use, identifies the required resources,
determines the priorities, sets time frames, and determines accountability.
The planning chart looks like this:
Goals Objectives Strategies Resources Priorities Time Frame Locs of
Responsibility

The ABCs of Strategic Planning

The starting point in the process of strategic planning is to determine where the organization is presently and
where it wants to be in the future. Situational analysis is the process that determines where the organization
is today.
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DEPARTMENT OF NURSING
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A comprehensive investigation of the external environment is an important part of situational analysis and
provides nurse managers (in their role as strategists), with clues as to what they should be doing. Assessment
of the internal environment is accomplished through an analysis of the organization’s subsystems: human
resource subsystem, clinical subsystem, financial subsystem, physical facilities subsystem, administrative
support subsystem, marketing subsystem, information subsystem, general management subsystem and the
organizational culture. Once these subsystems are understood, nurse managers (acting as strategists), have
a better appreciation for strategic capabilities or what the health organization can do.
Lastly, the process of revisiting or developing a mission forces members of the organization (under the
leadership of the nurse manager) to think about their distinctiveness; the vision forces them to think about
their hopes for the future; and the values make them aware of the things that should be held dear and not
compromised as they pursue their mission and vision.
According to Bryson and Alston, there are three basic questions that an organization must ask:
A. Who and what are we, what do we do now, and why?
B. What do we want to be and do in the future, and why?
C. How do we get from here to there?
It Is important that strategic planning team members and other key stakeholders maintain an ongoing
interactive communication. It is possible that as communication continues, new answers to one question may
change previous answers to other questions.

A Who and what are we, what do we do

Now, and why?
B What do we want to
Be and do in the future, and why?
C How do we get there?
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DEPARTMENT OF NURSING
NURSING LEADERSHIP AND MANAGEMENT
The Strategy Change Cycle
The strategy change cycle described by Bryson and Alston (1995) is a strategic planning and implementation
process with 10 steps. The presentation appears in a linear sequential manner but the practice of the process
is really iterative, where the participants usually rethink what they have done many times before the decisions
are finalized. Figure 6.2 depicts these steps, which will presently be described in more detail.

Step 1: Initiate and agree on a strategic planning process

A negotiated agreement with key internal and possibly external decision makers or opinion leaders on the
overall strategic planning process, the schedule, and the key planning tasks must be established. It is
important to identify the key decision makers and to determine which persons, groups, units, or organizations
should be involved.
The strategic planning process agreement itself should cover:
1. The purpose of the effort
2. Preferred steps in the process
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3. The schedule
4. The form and timing of reports
5. The role, functions, and membership of any group or committee empowered to oversee the effort.
6. The role, functions, and membership of the strategic planning team.
7. Commitment of necessary resources to proceed with the effort.

Step 2: Clarify organizational mandates

This step is to clarify the formal and informal mandates placed on the organization and to explore their
implications for organizational action.

Step 3: Identify and understand stakeholders; develop and refine mission and values
A stakeholder is any person, group, or entity that can place a claim on the organization’s attention, resources,
output, or is affected by that output. It is important to address the needs of the key stakeholders according to
those stakeholders’ criteria.
The mission statements developed and refined in this step must come after a thorough consideration of who
the organization’s stakeholders are. The organization’s value system also might be identified, discussed, and
documented.

Step 4: Assess the environment to identify strengths, weaknesses, opportunities, and threats.
The strengths and weaknesses of the organization are listed and evaluated, and their strategic implications
are weighed. Also, the opportunities and threats facing the organization are noted and explored and their
strategic implications are analyzed.

Step 5: Identify and frame strategic issues

The first four steps lead to the 5th, the naming of the strategic issues-the identification of the most important
challenges affecting the organization’s mandates, its mission and values, its product or service level or mix,
its costs, its financing, its organization, and its management.

Step 6: Formulate strategies to manage the issues

There are several types of strategies that can be developed to deal with the issues identified in step 5:
1. Grand strategy for the organization, network or community as a whole
2. Strategy for organizational sub-units
3. Program, service, product, or business process strategies
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4. Strategies for functions such as human resource management, information technology, finance and
purchasing

Step 7: Review and adopt the strategic plan

The purpose of this step is to get a formal commitment to adopt and proceed with implementation of the
plans. This step represents the culmination of the work of the previous steps, and points toward the
implementation step in which adopted strategies are realized in practice.

Step 8: Establish an effective organizational vision for the future

The description of the “organization’s vision of success” allows the different stakeholders to know not only
what the organization envisions for itself but also what the organization should look like as it implements its
strategies and achieves its full potential. The description is a guide for all organization members to know what
the organization expects from them minus constant managerial oversight.

Step 9: Develop an effective implementation process

The strategies adopted are now implemented throughout the relevant systems of the organization.
Successful strategy implementation depends largely on well thought of strategies that were formulated with
implementation in mind, and with the active involvement of those tasked to implement the plan.

Step 10: Reassess strategies and the strategic planning process

The purpose of the review is to determine what worked, what did not work, and why, as well to set the stage
for the next round of strategic planning.
Wheleen and Hunger (1986) proposed a modified strategic decision-making process to assist the
intrapreneur or entrepreneur and guide the strategic planning process for new ventures and initiatives. These
steps include questions that are helpful for nurse intrapreneurs interested in starting new ventures within or
separate from the existing organization. These interrelated steps are:
1. Evaluate current performance results. What is the “business” of the new vent or idea? What
quantitative indicators are available to show that the product or service has been provided? What
qualitative indicators are available regarding the performance of the new product or service?
2. Examine current mission. Does the written and practiced philosophy support innovation and an
entrepreneurial approach? What strategies are used to help consumers understand how and when
to use the existing services? What are the goals or objectives of the existing program or service that
might be used to develop the new Idea or business?
3. Review strategic managers. Who are the internal and external organizational players important to
the idea or venture? Are there other parties who should be involved in the development of the
proposed idea or venture?
4. Scan the external environment. What are the other products or services offered by the organization
and by others in the region or locality? What are the organization’s prominent capabilities, skills, and
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relationships? What are the strengths and weaknesses of the organization as it relates to innovation
and entrepreneurship? What are the economic trends affecting the organization? What information
is available regarding the service area and the people in the community or catchment area?
5. Scan the internal environment. What will a new venture mean to those in the present organization
and what will be its effects on their current workload? Will a new unit need to be defined and
dedicated to the new venture, or will it be a part of an already established assignment?
6. Select strategic factors from strengths and limitations. How can commitment to the new venture
be achieved? What marketing strategies are needed? What can be done to the return on investment
for an established program or service within the context of a new venture?
7. Select strategic factors from threats and opportunities. What opportunities are there in the
environment that will support the new venture? What are the potential threats? What other new
services will be needed in the new venture? What other related services or programs might be
generated because of the new venture?
8. Analyze strategic factors. What is the target market? How will the new venture or business be
synchronized with the existing imperatives? If a separate entity is created, how will the new venture
co-exist and complement the existing organization? How will the communication lines be opened?
9. Revise mission and objectives. Considering the culture, status and goals of the existing
organization, how will the new venture fit into the defined strategic initiatives? What changes will
need to be made internally to support an intrapreneurial effort?
10. Formulate a plan. Given all the required data, what are the alternatives that should guide the
development of the business plan? Is the plan based on realistic assumptions and internally
consistent with the data? Will the strategy create economic or political value within acceptable risk
limits?

Benefits of Strategic Planning

Now that we have gone through the process, let us examine the potential benefits of strategic planning.
Bryson and Alston (1996) discuss the numerous benefits of strategic planning. At the same time, they caution
that the process does not guarantee that they will all be realized in practice. The benefits include:
1. Increased effectiveness. The organization responds effectively to the rapidly changing circumstances
and at the same time works to enhance its performance, furthering its mission and accomplishing its goals.
2. Improved efficiency. The same or better results are realized with lesser resources.
3. Improved understanding and better learning. There is a resultant better understanding of the
organization’s situation, and it is better able to reconceptualize and establish an interpretive framework that
can help in strategy development and implementation.
4. Better decision-making. Focused, coherent and defensible decisions are arrived at and made in the light
of their future consequences.
5. Improved communication and public relations. A desirable image for the organization is established
and managed, and mission, vision, goals, strategies, and action programs are communicated effectively to
key stakeholders.
6. Increased political support. When the organization’s legitimacy is established, and its advocacy base is
broadened, then it is possible to develop a powerful and supportive coalition.
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DEPARTMENT OF NURSING
NURSING LEADERSHIP AND MANAGEMENT
Common Pitfalls in Strategic Planning in Health Services
Walfish and Goplerud (1983) have observed that the preference of executives for crisis management has to
do with the fact that strategic planning is not done in health services organizations. The 10 most important
pit- falls in strategic planning in health services identified by Goplerud et al. in 1984 are still applicable to the
present situation. It is best to be aware of them, so that managers and administrators can be proactive, even
if they must continuously juggle urgent demands on their time.
The common pitfalls of strategic planning in health services include:
1. Ignoring the power structure of the organizational setting in organizing the planning process.
2. Top management’s assumption that it can delegate the planning function to a planner.
3. Forgetting that planning is a political, social, and organizational process, as well as a rational one.
4. Too much centralization of long-range planning in the central administration so that departments feel little
responsibility for developing effective plans.
5. Failure to develop overall agency goals suitable as a basis for formulating long-range plans.
6. Assuming that comprehensive planning is something separate from the entire management process.
7. Top management becomes so engrossed in current problems that it spends insufficient time on long-range
planning, and the process becomes discredited among other managers and staff.
8. Failure to ensure the necessary involvement of major personnel in the process.
9. Failure of top management to review with departmental and divisional heads the long-range plans they
have developed.
10. Assuming that a formal system can be introduced into a human setting without a careful reappraisal of
current management practices and decision-making processes.
Activity 6-1
You can this activity by group (same group as your seminar, or you can make your own, or you can do a
single independent wok) Then decide on a particular health organization where the group can do situational
analysis, situation audit and strategic planning. Reflecting on your own organization or unit: (a) do a SWOT
analysis using the four quadrants corresponding to the four categories: internal strengths, internal
weaknesses, external opportunities, and external threats; and (b) using the planning chart, develop your
strategic plan.
SAQ 6-1
1. Why is it important for nurse managers and administrators to learn strategic planning?
2. What is your organization’s mission and vision?
3. Describe the organizational culture of your workplace, using the concepts: shared values, corporate
heroes, rituals and the cultural network.
4. Suggest ways in which an organization can foster development of commitment, competence, and
consistency among its constituents.
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SAQ 6-2
1. Check how your organization makes an environmental assessment or situation audit. Does it use any of
the processes mentioned here? Whether yes or no, describe briefly.
2. What is the purpose of your situation audit?