Classical Organizational Theory Free Sample

The main focus of the classical organizational theory is changing the management process to improve work performance. Different researchers attempted to create an effective system regarding three different aspects of management that can increase work efficiency. For instance, Henri Fayol was trying to construct a theory of classical management to prioritize the interactions between a manager and staff. He provided a framework that could be used by supervisors in their work, which included several principles that should be taken into account while communicating with personnel. Such activities involved planning, organizing, commanding, coordinating, and controlling.

As for the first principle, it is evident that a manager should participate in the process of designing every business project to acquire full control over the situation and monitor other individuals’ operations. The second principle means that the manager should also guarantee that workers have access to all resources that are needed in the production (Fayol, 2016). The third important aspect implies that a supervisor has the power to guide and direct the staff to a particular result. However, aside from commanding and giving orders, coordinating their actions is also essential. In other words, without cooperation, it would be more difficult to complete work-related tasks. The final aspect is the principle of control, which means that a manager is the one who evaluates the result and makes sure that the instructions are properly followed. Since his theory touches upon the subject of the relationship between a supervisor and a team, it is considered to be classical, and therefore, it is accepted in the business community.

As for other ideas, for example, Fredrick Taylor developed a theory of scientific management, which focused on providing various rewards for the quality of performance. It should be done to increase a team’s motivation and overall productivity (Savino, 2016). It can be assumed that such type of relationship is mutual since both participants, the employer and the employee, acquire benefits from working with each other. Aside from that, every other aspect of the business should receive profits, which seems an ambitious idea. For this reason, Taylor also created several principles that could help companies’ owners ensure maximum prosperity. For instance, the researcher suggests breaking down tasks into smaller ones and distributing them among the team to increase the speed of their completion (Savino, 2016). Another suggestion is monitoring the performance by a manager, as well as creating a clear hierarchy of workers according to their efforts and skills.

The third researcher who also contributed to the development of classical organization thought is Max Weber, who constructed a theory of bureaucracy. Its main principle is built on the belief that power should be firmly distributed between a team and a manager. Additionally, to improve the outcomes of business activities, strict measures and rules should be implemented in every company (Khorasani & Almasifard, 2017). For example, the hierarchy in a team should be assembled according to the skill levels of each worker, while a manager should be at the top of the chain. Consequently, it means that a supervisor should possess all the appropriate qualifications. Moreover, a manager is held to a high standard of skills and knowledge, while the personality of a potential administrator is not considered. There is doubt, however, that this theory is effective in a business environment since it discourages teamwork, creativity, and encourages routinely completing tasks.


Fayol, H. (2016). General and industrial management. Ravenio Books.

Khorasani, S. T., & Almasifard, M. (2017). Evolution of management theory within 20 century: A systemic overview of paradigm shifts in management. International Review of Management and Marketing, 7(3), 134-137.

Savino, D. M. (2016). Frederick Winslow Taylor and his lasting legacy of functional leadership competence. Journal of Leadership, Accountability and Ethics, 13(1), 70-76.

HRM Software For Business And The Affordable Care Act

Signing into law the Affordable Care Act (ACA) in 2010 was a significant step, which considerably influenced health care in the United States. The idea of making health care more affordable was appealing to millions of Americans. However, different issues arose in the process of the implementation of the ACA. Nevertheless, the Affordable Care Act has its advantages and disadvantages; thus, it remains controversial.

To begin with, the ACA has affected large employers, as well as full-time, part-time, and temporary employees, both positively and negatively. On the one hand, many full-time employees of big companies have received different benefits. Employers with more than 50 full-time employees must provide coverage that meets specific criteria, and those who do not do so must pay penalties (Gaffney & McCormick, 2017). On the other hand, some businesses have reduced employees’ work hours not to cover healthcare expenses or offer insurance. Hence, many full-time workers have lost some benefits, while part-time and temporary employees have not gained any. Therefore, the ACA has its advantages and drawbacks for large employers and their employees.

Furthermore, many organizations face different challenges while trying to comply with the ACA. For instance, every company must identify who is eligible to be offered insurance under ACA rules. This process is often time-consuming and ineffective, though most organizations go through it to avoid penalties. Thus, much time and effort are wasted instead of being invested in the processes that are more useful and productive. Besides, preparing ACA forms is a challenge for many employers and employees, as it takes much time and requires much data. What is more, because of the complexity of the process, the problem regarding the accuracy of data arises. Therefore, complying with the Affordable Care Act is a demanding process for numerous organizations.

Nevertheless, the fact that the Internal Revenue Service (IRS) and the Department of Labour (DOL) play a role in the ACA’s enforcement proves its significance. The former and the latter are responsible for many crucial issues in the United States and have considerable power. Therefore, it is advantageous for the ACA to be regulated by the IRS and the DOL, as more individuals and organizations are willing to stick to it to avoid different problems. Thus, the ACA gains more significance both legally and socially.

In addition, the Affordable Care Act has considerably influenced healthcare organizations as employers and as healthcare providers. It aimed to improve many aspects for healthcare organizations ranging from increased payments for healthcare workers to adopting new cost-effective ways to treat patients. However, the ACA is exceptionally complicated; thus, many issues arose in its implementation. Undoubtedly, Human Resources Management (HRM) in healthcare organizations should endeavor to simplify the process as much as possible and choose the most advantageous ways to address the issues arising from the law. Even though it may be challenging, outcomes must be worth the effort. HRM is responsible for the successful implementation of the ACA and needs to work diligently to make the most of the law.

In conclusion, the Affordable Care Act has its strengths, as well as weaknesses. The reason for it is the complexity of the law, which causes different challenges in its implementation. Large employers endeavor to improve their business performance; thus, some employees do not receive any benefits or even lose them. Organizations also face challenges in complying with the ACA because of its complexity. Fortunately, the IRS and the DOL play a role in the enforcement of the law, and numerous individuals and companies strictly follow ACA rules to avoid different problems. However, if HRM addresses the issues arising from the law successfully, many problems will be solved.


Gaffney, A., & McCormick, D. (2017). The Affordable Care Act: Implications for health-care equity. Lancet, 389, 1442-1452.

Risk-Based Reimbursement In Healthcare

In most cases capitation is used to cut the physicians’ compensation. However, it can be utilized as a tool for providing proper reimbursement to reduce inpatient hospital stays and specialist procedures which patients may not need (Erdek, 2018). The hospitals where the primary physician work make per diem arrangement with the Health Management Organizations (HMO) or capitation contract. The agreement defines the financial matrix that outlines the medical group’s responsibilities or hospital fund. In most of the (Independent Practice Association) IPA contracts available, the healthcare team caters to outpatient services, both professional and diagnostics, such as CT scans, cardiac testing, and MRI (Falkson, &Srinivasan, 2020). This calls for planning for the expenses of both the facility and professional services.

Managing Care Organizations (MCOs) Risk Assessment and Capitation Model Functions

The pool of the risk depends on the hospital contracts, most of the time, HMOs have shared risk contracts. Thus, physicians partner with the HMOs to share both the deficits and the surplus (Messer, 2019). The shortfall in the hospital funds results causes the medical group to pay into the health plan. The capitation is calculated and shared between the healthcare team and the hospital in the entire risk contract.

Thus, for a unified deal, the member pays $36 per month as a commercial premium income, which does not break even without retaining the common risk (Messer, 2019). In the unified plan, the challenge is the provision of cost-effective quality services. It is different from IPA design in that only specialists get capitation. The primary care physicians are reimbursed based on fee for service basis which ensures they provide as much care as possible to the patients. It is because overutilization of basic care services has fewer effects on the budget than specialist services’ overutilization.

How Risk-Based Compensation Limits Freedom of Primary Care Physicians

The income limitation ensures that the budget is under tight control. Therefore, it is necessary to obtain the amount spent on ancillary services, primary care, and specialist care. 23% of IPA expenditure is on primary care, 56% on specialists, 14% on ancillary care, and 7% on administrative costs (Messer, 2019). As per the expenditure, specialists spend more than half of the capitation budget. This was the main reason why the united physicians capitated the specialists. Another cause was the dissatisfaction with the traditional utilization method of authorization before the procedure. Prior approval is tiresome and has a more negligible effect on utilization management.

Merits and Demerits of Shared and Group Capitation

Shared capitation regulates specialist’s competition and also offers freedom of referrals to the primary care physician, though it has some shortcomings. It is because productivity is based on a first-come, first-serve basis (Koenecke, 2019). It does not control the utilization healthcare quality across the board. Group capitation has more advantages than shortcomings, some of the merits include specialists having control of their payments, low overhead cost, specialty creates their guidelines, and putting the UR back to providers (Koenecke, 2019). While demerits require single physicians to band together, and also there are selection and deselection of the healthcare providers.

Why HMOs Prefer Monthly Premium Fee

Regardless of the number of services given in a month, the HMO members pay a fixed monthly fee and their medical services are prepaid. In return, the HMOs provide a wide variety of services. Except for the exceptional cases, the members must receive physician and specialist services within the facilities that are in the HMO network. The practitioner is tasked with providing all the medical care needs and must be consulted before one (a member of HMO) sees a specialist. Due to these control systems, the healthcare costs tend to rise less rapidly than other insurance companies.

Pay-for-Performance (P4P) Method as a Better Model

Capitation or P4P bases payments on the outcomes, and it has a high potential for improving the quality of care. The existing payment methods do not consider the quality of services given in determining reimbursements (Erdek, 2018). The incentives of the current techniques promote poor quality care. The fee for service method pays the providers based on the complexity and number of the services provided without considering the quality, efficiency, and patient outcomes, and P4P is meant to correct this deficiency.

Most insurers, have incorporated P4P as one of their elements. However, the program is being introduced to the market by a variety of stakeholders, which is done through various demonstrations and public statements (Erdek, 2018). Through these declarations, the Center for Medicare and Medicaid Services (CMS) has made its intentions clear on introducing P4P among physicians, hospitals, and other providers. While there are some objects for P4P as countering professionalism by paying twice for the same job done, it is the best refinement of pay-for-fee for service method and capitation. The P4P will not replace the current payment structure though. It will allow payers to consider several quality indicators and the volume of services given to patients or the number of lives covered in case of capitation (Erdek, 2018). It is a mechanism to correct some of the distortionary incentives in the fee-for-service method. For instance, reimbursing activities connected to individuals’ health, such as screening and managing chronic illnesses that have been under reimbursed relative to the specialized care, improves quality.

Evidence of Pay for Performance

Many studies have been done on P4P methods of reimbursement. Before the increase in P4P, there were few controlled research in the healthcare literature. Two of the analysis found significant improvements in evidence-based measures of quality in P4P plans (Powell,2019). The recent reviews on the evaluation of the programs have been mixed up. Therefore, it reasonably corrects to conclude that P4P has positive effects on the quality of care, although the payor has a lot to learn about effective ways to implement it.

Limitation of Pay for Performance

The critical challenge of pay-for-performance from a patient care point of view is dealing with diverse patient populations to minimize incentive. Many objecting physicians argue that quality measures of the payment are based on are confounded by differences in the severity of the patients’ illness and behavior. Physicians who treat more ill-patients and less compliant ones are likely to elicit poor outcomes despite their efforts to improve quality (Powell, 2019). The challenge of the payment method is risk adjustment or other approaches to account for these differences.

Rewarding specific and easy to document quality measures discourages unrewarded services that may be important in patients but challenging to measure. Meaningful experiences are lost when the assessors focus too much on the test performance. Similarly, the P4P emphases on few clinical areas which can be measured on a quality basis, and other equally important areas are likely to suffer (Powell,2019). The payers can address this by introducing broad quality measures that constitute patient experiences and the whole health care process.

The future of Pay-for-Performance

It is an inevitable refinement in healthcare quality and reporting. It will be possible to convince all stakeholders, that there are quality healthcare system issues in the US. This will result in the widespread need to reform the payment systems. P4P will remove most distortion in the giving incentives and focus on the quality-of-service delivery (Powell,2019). To succeed in critical aspects of population health, the system should devise ways of curbing the earlier mentioned shortcomings and also meet the objective at a low cost.


Erdek M. A. (2018). Pay-for-Performance Reimbursement for Clinicians: Common Sense or a Wolf in Sheep’s Clothing?. Pain medicine (Malden, Mass.), 19(11), 2106–2108. Web.

Falkson, S. R., & Srinivasan, V. N. (2020). Health Maintenance Organization (HMO). StatPearls [Internet]. Web.

Koenecke A. (2019). A game-theoretic setting of capitation versus fee-for-service payment systems. PloS one, 14(10), e0223672. Web.

Messer, T. (2019). Provider Risk Sharing and Random Noise. Web.

Powell S. K. (2019). Choosing Medicare Advantage Plans Versus Traditional Fee-for-Service: Is This Change the Tipping Point?. Professional case management, 24(1), 1–3. Web.

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