Psychiatric Annals

Organizational Policy: Roots and Realities

Saul Feldman, DPA

Abstract

A community mental health center develops a new moderate cost psychotherapy program to increase its revenue; a mental hospital lowers its census by discharging patients who in the past would have remained much longer; a university department of psychiatry changes its training program; a state mental health department reorganizes and sets up regional offices. These and many other such actions are the result of new policies or changes in existing ones, the sum of which comprises an organization's identity - how it appears to the world around it through its actions.

A policy can be a plan, a course of action, or a set of decisions that influence an organization's behavior. Policies may vary in scope, in whom they affect, in how they are implemented, and in the processes through which they develop. They may be static and enduring or rapidly changing; expressed or implied; purposive or inadvertent. Whatever their form, an organization's policies affect every significant aspect of its life.

Only in part do organizational policies result from orderly and clearly structured processes in which the policy-makers and the implementers have well-defined roles, despite the dominance of thought that suggests otherwise. This long enduring but largely inaccurate perception derives from the early theorists in public policy who postulated a clear separation of policy development from implementation. The term "policy" comes largely from government, where in the early 1900s it was the notion of political scientists and those in the new discipline of public administration that the legislature formulates policy and the executive carries it out; that in practice as well as in theory the two processes could be clearly differentiated. While appealingly rational and "clean," this view was little related to actual behavior. But because of their close proximity to government through funding, regulation, and the like, it carried over into the beliefs and expectations of those involved in the administration of mental health and other human service programs. Here boards of directors were presumably the legislature's counterpart, establishing policy while the executive and staff dutifully carried it out.

BOARD OF DIRECTOR'S ROLE

There are few more pervasive myths in the governance of mental health and other human service programs than that of the board of directors as a major determinant of organizational policy. While the literature and the rhetoric at professional meetings are replete with the gospel of boards as central to the development of policy, the reality is otherwise. There appears to be an inability to disentangle theory from practice; to separate the normative from the actual; to recognize that at least with regard to policy development, boards do not and perhaps cannot function as they were intended and as many would like to believe.

Nowhere is the peripheral role of boards in policy development more apparent than in the budget process. More than any other component of organizational life, the budget incorporates, at least implicitly, all significant policy decisions. These are represented in the budget by where the organization expects to derive its revenue, how it will be spent, and in what amounts. Yet, the involvement of boards in the budget process is often quite peremptory; the budget they approve generally turns out to be almost identical to the one requested. When changes are made, they tend to be in items of little import - secretarial salaries is a perennial favorite. ' One board member expressed his feeling about this state of affairs:

I wonder how many trustees have shared my experience of masking feelings of impotence and ignorance as I solemnly review the lists of figures. From time to time 1 would ask why a…

A community mental health center develops a new moderate cost psychotherapy program to increase its revenue; a mental hospital lowers its census by discharging patients who in the past would have remained much longer; a university department of psychiatry changes its training program; a state mental health department reorganizes and sets up regional offices. These and many other such actions are the result of new policies or changes in existing ones, the sum of which comprises an organization's identity - how it appears to the world around it through its actions.

A policy can be a plan, a course of action, or a set of decisions that influence an organization's behavior. Policies may vary in scope, in whom they affect, in how they are implemented, and in the processes through which they develop. They may be static and enduring or rapidly changing; expressed or implied; purposive or inadvertent. Whatever their form, an organization's policies affect every significant aspect of its life.

Only in part do organizational policies result from orderly and clearly structured processes in which the policy-makers and the implementers have well-defined roles, despite the dominance of thought that suggests otherwise. This long enduring but largely inaccurate perception derives from the early theorists in public policy who postulated a clear separation of policy development from implementation. The term "policy" comes largely from government, where in the early 1900s it was the notion of political scientists and those in the new discipline of public administration that the legislature formulates policy and the executive carries it out; that in practice as well as in theory the two processes could be clearly differentiated. While appealingly rational and "clean," this view was little related to actual behavior. But because of their close proximity to government through funding, regulation, and the like, it carried over into the beliefs and expectations of those involved in the administration of mental health and other human service programs. Here boards of directors were presumably the legislature's counterpart, establishing policy while the executive and staff dutifully carried it out.

BOARD OF DIRECTOR'S ROLE

There are few more pervasive myths in the governance of mental health and other human service programs than that of the board of directors as a major determinant of organizational policy. While the literature and the rhetoric at professional meetings are replete with the gospel of boards as central to the development of policy, the reality is otherwise. There appears to be an inability to disentangle theory from practice; to separate the normative from the actual; to recognize that at least with regard to policy development, boards do not and perhaps cannot function as they were intended and as many would like to believe.

Nowhere is the peripheral role of boards in policy development more apparent than in the budget process. More than any other component of organizational life, the budget incorporates, at least implicitly, all significant policy decisions. These are represented in the budget by where the organization expects to derive its revenue, how it will be spent, and in what amounts. Yet, the involvement of boards in the budget process is often quite peremptory; the budget they approve generally turns out to be almost identical to the one requested. When changes are made, they tend to be in items of little import - secretarial salaries is a perennial favorite. ' One board member expressed his feeling about this state of affairs:

I wonder how many trustees have shared my experience of masking feelings of impotence and ignorance as I solemnly review the lists of figures. From time to time 1 would ask why a figure differed from the corresponding one a year earlier. If the income did not equal the outgo, I refused to approve the budget. But as soon as the budget was in balance, I approved it, without any real reason for knowing that the year could or should come out that way.2

Formidable constraints on even the most qualified, best-intentioned boards prevent them from doing much with policy development. These include a large self-perpetuating membership; once-a-month meetings for only a few hours; little access to the kind of information about the organization that would permit an in-depth appraisal; a general inclination to conform to the wishes of the executive; and an emphasis on the board advocacy role, ie, helping the organization to actualize existing policies rather than to develop new ones.

But the nature of the process itself is the chief deterrent to a significant policy development role for a board of directors. It is simply not possible, at least not with any real clarity, to separate the processes through which policies are developed from their implementation. They intermingle in a kind of symbiotic relationship. What may appear as coherent organizational policy is in reality a stream of actions, events and influences, a potpourri of often unrelated causes and effects. It is difficult to distinguish the product from the process. Policy development, though perhaps not identifiable as such, is intrinsic to the ongoing daily life of the organization.

POLICY TYPES

An organization's policies may be any one of the following:

Derivative Policy

A derivative policy is imposed by a superordinate body external to the organization that has the authority to exercise some degree of control over it. For example, the department of psychiatry in the medical school is bound by certain of the school's policies with regard to curricula, standards for faculty promotion, etc. The public mental hospital must work within the state's civil service policies, and the community mental health center must provide services to people within a geographic area as required by federal and/or state government. The organization has little direct control over derivative policies, except to the extent that it may have some flexibility in carrying them out.

Anticipatory Policy

Anticipatory policies come into being as the outcome of a formal deliberative process that tries to predict what the organization's future condition is likely to be and to plan for how it should cope. The community mental health center that develops a new moderate cost psychotherapy program, for example, may be doing so in anticipation of cutbacks in federal funding at some time in the future.

Anticipatory policy decisions are likely to be most useful when they are the result of a wellstructured planning process in which the parties have clearly defined roles, one that involves staff as far down in the organization as possible. It is also helpful if the process is guided by a framework that includes at least some of the following questions:

1. What changes (ie, regulatory, legislative, demographic, competitive, fiscal) are likely to affect the organization, when, and with what effect?

2. In the light of these future conditions, what should the organization try to accomplish - what should be its goals?

3. What programs and activities will be available to accomplish these goals?

4. What are the costs and benefits of each of these - which should be implemented and with what likely effect?

5. What policy decisions will be required to activate and sustain these programs, how and by whom should these decisions be made, communicated and carried out?

6. How will the organization be able to assess the extent to which these policies and programs are actually accomplishing its goals?

Reactive Policy

Many of the policies resulting from even the best conceived, most carefully executed planning process will inevitably fall victim to random and unpredictable events that impinge on the organization but over which it has little or no control. Reactive policy, ie, the organization's reactions to these events, is often a product of the fluctuating regulatory environments in which many mental health organizations operate as well as their dependence on government funding policies and third party payors not ordinarily known for consistency. The heightened public visibility of such events as deinstitutionalization increase the likelihood and the effects of random occurrences on the mental health organization. Acts of violence by or against ex-state mental hospital patients that are reported by the press, for example, can lead to the very rapid development of new, more restrictive discharge policies, more extensive follow-up procedures, and the development of new community facilities. Such random occurrences are an ongoing part of organizational life. They require quick policy decisions often based on little information, and a high degree of flexibility not ordinarily consistent with a lengthy and highly structured planning process.

Self-Generating Policy

Policy is also self-generating, in effect policy breeds policy. It is almost invariably true that policies have unintended effects, quite different from what may have been anticipated. A policy decision made to resolve some particular organizational dilemma may or may not succeed. But even if it does, it is likely to cause another problem, unintended and perhaps even more difficult to resolve. As Kissinger has pointed out in discussing American foreign policy, "... a series of moves that has produced a certain result may not have been planned to produce that result."3

So the solution to one problem often contains the seeds of another, and the new one will require still more policy if it is to be resolved. A mental health organization that provides services in one centralized location may, for example, decide to solve its accessibility problem by decentralizing some of its services into newly developed satellite facilities. While the satellites may enhance accessibility, they could well usher in a whole set of new problems - of control, of communication of divided loyalties, of unhealthy competition for resources. And the "solutions" to these problems will in turn be the source of others.

Induced Through Implementation

Whether derivative, anticipatory, reactive or self-generating, organizational policies are substantially affected by the behavior of those responsible for implementing them. It may well be that the daily behavior of staff is the greatest single determinant of organizational policy, of how the organization appears to those who come into contact with it. Policies are rarely so specific that there are no degrees of freedom in carrying them out. Even staff who are strongly committed to them have sufficient discretion to modify the organization's policies in the ordinary course of their daily activities without necessarily intending to do so. Where the staff do not favor particular policies, they will have little difficulty ignoring them, implementing them only partially or in a manner that distorts their purpose. This is particularly true with professionally trained staff over whom the organization has limited control.

Mental health professionals place a high value on autonomy, on freedom from control by others and from compliance with organizational policies and procedures. The typical staff in a mental health organization is not unlike a Navy with more admirals than ships. Intrinsic to professional training and reinforced by the patient/therapist relationship, personal sovereignty is held in great esteem, if not sanctified. I have used the term "M. Deity" to characterize this attitude in psychiatrists, but it is certainly applicable to other mental health professionals as well.

Professionalism almost by definition subsumes adherence to particular standards of behavior and an identification with the values and attitudes embodied by the profession to which one belongs. These standards and values are incorporated into the behavior of psychiatrists and others through their training and the professional socialization processes in which they are involved. But professionalism is, according to Blau and Scott,4 "... inversely related to organizational loyalty." So where there is a real or imagined conflict between organizational policy and what is perceived to be the standards and values of one's profession, the latter will prevail. Disloyalty to the organization (at least as perceived by the administration) and a disinclination to carry out its policies will be the result. According to Whittington:

Each individual staff member (in a mental health organization) has the power, in dozens of transactions each day, to either facilitate the policies of the agency or to frustrate and divert them; to conform to the expectations of management or to rebel against them.5

By not accurately recording their billable time, for example, or by subtly suggesting to patients that they understate their income and thereby be charged a lower fee, professional staff can easily subvert the outcome if not the intent of a new fee policy designed to increase the organization's revenue.

Sunk Costs

Policy is also determined by what the organization is already doing. That in which it is already invested, financially and emotionally, strongly influences what it is likely to do in the future and when. An organization's". . . commitments at any given time inevitably limit the range of . . . future adaptability. "6 Such "sunk costs" are a very important and frequently overlooked determinant of organizational policy.

Any program of significance quickly develops a constituency group, those who benefit from it and are likely to advocate for its survival and growth. These beneficiaries may be staff, those directly involved in the program and others who are not; or they may be people outside the organization who value the program as service recipients or for the general welfare. Whatever the specific sources of support, they constitute an important influence on the organization to continue that in which it is already engaged. If they are to come with little struggle, or at all, new programs often require new resources that do not threaten the survival of those that already exist. It is no wonder that organizational change is not easy.

But beyond this active support for existing programs (or passive resistance to new ones) there is a strong reluctance to give up that to which the organization is already particularly committed, those things in which it has made a substantial investment. This is no less true of individuals than nations. Whether it be continuing expenditures to repair an automobile, to win a war in Viet Nam, or to fully implement a new program, the inclination is very strong to "stick with it," to invest some more, at least in part to avoid failure and to justify the resources that have already been committed but may not yet be accomplishing their purpose. Combined with the inherent organizational inertia and resistance to change, sunk costs act as a strong enforcer of the status quo and represent a formidable barrier to the development of new programs and policies.

CONCLUSION

What may appear to the observer as coherent organizational policy with clearly prescribed and predictable causes and effects is generally neither. Policy is rather the sum of the organization's frequently disconnected adaptations to planned and unplanned events that intrude on its existence. This is not to suggest that there is no role for formal planning and policy development that attempt to anticipate the future and prepare for it. But such processes, rather than being central to organizational behavior as is so often understood, are only one determinant and frequently a very small one, of what organizations do and why. Organizational policy is much more likely to be the outcome of an ongoing, self-generating, somewhat haphazard interaction between process and purpose, intent and accident, foresight and fortune.

REFERENCES

1. Feldman S: Mental health administration: An appraisal, in Feldman S (ed): The Administration of Mental Health Services. Springfield, IL. Charles C. Thomas, Publisher, 1980.

2. MacLeod RK: Program budgeting works in non-profit institutions. Howard Business Review 197 1 : September-October.

3. Kissinger H: Seminar on Bureaucracy. Politics and Strategy. Presented at University of California, 1968.

4. Blau PM. Richard SW: Formal Organkations. San Francisco. Chandler Publishing Company. 1962.

5. Whittington HG: People make programs: Personnel management, in Feldman S (ed): The Administration of Mental Health Sen'ices. Springfield. IL. Charles C. Thomas, Publisher, 1980.

6. Pfiffner IM, Presthus L: Public Administration. New York. The Ronald Press, 1967.

10.3928/0048-5713-19841201-08

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