Strategic Planning in Non-Profit Hospital Setting

Introduction

Strategic planning is a popular concept that is widely studied and applied in all kinds of businesses, irrespective of their size and goals. Although strategic planning was first developed for use in the public sector, it is now widely used in public companies and health care organizations, such as hospitals (Swayne et al. vii). It is a complex multi-step process that is designed to help businesses build their goals and objectives, as well as define paths to achieving them. This paper aims to explore the core advantages and components of strategic planning in a non-profit hospital setting, as well as its effect on the internal stakeholders of the organization, such as the higher management and regular employees.

Advantages of Strategic Planning

The advantages of strategic planning have been extensively studied in business and management research. Most of the scholarly text emphasize the positive influence of strategic planning on the company’s financial performance. However, whereas most research focused on mapping a direct relationship between strategic planning and performance, Arasa and K’Obonyo attempted to define the influence of the individual steps of strategic planning on firm performance (201). The researchers explain that strategic planning approaches the organization as a system composed of a set of subsystems (Arasa and K’Obonyo 204).

This is important as it allows managers to use analysis to identify specific issues and develop a strategy to alleviate them. The results of the study proved that strategic planning was related to an increase in all financial performance indicators, as well as to better non-financial performance (Arasa and K’Obonyo 210). The researchers also showed that, although all of the strategic planning steps had a strong positive influence on financial performance, the positive effect of the analysis of the business environment was the most prominent (Arasa and K’Obonyo 209). The analysis of strategic issues was the second most useful step of strategic planning; however, defining purpose, goals, and philosophies were least important (Arasa and K’Obonyo 209).

Whereas these results are indeed enlightening, they can be logically explained. The analysis of the business environment and strategic issues are designed to define challenges and issues that impair the business’ operations and profitability, which is why these steps have the most prominent influence on financial performance. Defining purpose, goals, and philosophies, on the other hand, is linked not to the financial performance, but the company’s strategy overall; as the goal of this process is not to enhance profitability and operations, it is not surprising that it does not affect financial performance in the same way as the steps designed to improve it.

Another significant benefit of strategic planning is that it allows companies to compete more effectively. According to Abraham, strategic planning can make a company a stronger competitor by enhancing its knowledge of the industry and market-changing, building awareness of the customers’ needs, and by enabling it to find new opportunities for developing (188). Moreover, the competitive position can be advanced by analyzing competitors and their strategies, which is also among the components of strategic planning (Abraham 188). The author also states that effective strategic planning ensures that all programs and business actions executed by the company align with its vision and company objectives, which can promote decision-making (Abraham 189).

Furthermore, strategic planning can influence the company’s culture, forcing it to be more innovative, thus facilitating an effective response to external changes in the market. This view is supported by Dibrell et al., who found that the formal strategic planning process positively impacts the organization’s capability for planning flexibility (2004). This promotes innovation and change, enabling the business to survive and grow even in markets that are subject to frequent shifts and changes. Healthcare is one of those markets. As the interview subject pointed out, healthcare depends on political and demographic shifts, which creates a need for flexible and adaptive planning strategies. Therefore, the strategic planning process can help hospitals to operate effectively in the changing environment.

Core Components of Strategic Planning

The strategic planning process involves six core components that are used in most companies. The process begins with an extensive analysis of the external environment, which includes the general market environment and competitive environment (Swayne et al. 34, 74). This process helps to establish the external factors that can influence firm performance, such as political changes, competition, and technological innovations. Next, the company has to perform an internal analysis, which includes analysis of operations, as well as strengths and weaknesses of the company (Swayne et al. 123). After the analysis is conducted, the company has to determine the direction for future development.

Developing strategic alternatives based on the company’s goals and vision is the fourth step of the strategic planning process (Swayne et al. 195). The management should then proceed to evaluate the strategic alternatives to choose the one most effective and relevant to the company’s goals. Evaluation of the strategies is based not only on their prospective efficiency but also on other factors. For example, it is crucial to ensure that the proposed strategies are easy to implement and control (Arasa and K’Obonyo 203). If the implementation of a strategy would be too expensive, or if no relevant control measures apply to it, it might be better for the company to choose a more efficient alternative. Once the strategy has been selected, the management proceeds to develop an implementation, evaluation, and control plan (Arasa and K’Obonyo 203) which defines how the chosen strategy will be applied.

Internal Stakeholders and Strategic Planning

The relationship between internal stakeholders and strategic planning is rather complex. According to research, the involvement of internal stakeholders, such as employees, in the planning process can increase the effectiveness of strategic planning and promote better outcomes. For instance, the practice of participative strategic planning proved to be effective in raising employee commitment to strategy implementation (Kohtamäki et al. 171). Ensuring that all employees are committed to the chosen strategy, on the other hand, promotes the accurate implementation of the plan and helps the managers to facilitate employee engagement. Participative strategic planning can thus lead to better performance outcomes and higher efficiency of the chosen strategy (Kohtamäki et al. 171).

As noted by Mittenthal, participative strategic planning allows the management to share planning responsibilities with front-line workers, who may offer valuable suggestions to facilitate the implementation (5). Engagement of employees in strategic planning can provide many other benefits, including improved communication and better risk management (WPCWI 10). Low level of participation, impaired collaboration, and poor communication are among the main reasons for implementation failures, as suggested by Rojas-Arce et al. (249). Therefore, by identifying the key stakeholders and promoting their participation in the planning process, the company can ensure that strategic planning is efficient and that the implementation process is smooth and raises no operational or organizational issues.

However, while the involvement of internal stakeholders is essential to the company, it is also beneficial for employees. First of all, participative strategic planning creates a sense of involvement, which makes employees feel more valued. This can improve motivation and work satisfaction among employees, thus enhancing organizational climate. Moreover, strategic planning provides employees with a set of navigational tools to guide their work (Tiwari and Winters 169). Having distinctive goals and a clear plan could potentially lower job stress, as it facilitates decision-making. Finally, by improving the company’s performance and profitability, strategic planning provides job stability to all employees, which can also have a positive effect on their work and life.

Leadership and Strategic Planning

Leadership plays an important role in strategic planning, both in private and public organizations. For instance, Azhar et al. identify that leadership “is considered as a link that relates the strategic management process with the organization’s vision” (35). Aligning strategy with the organization’s vision is a crucial factor for success in planning and implementation, which means that effective leadership can lead to better outcomes of strategic planning. Moreover, leaders have extensive knowledge of the company, as well as appropriate management strategies, which helps them to analyze the environment and find opportunities for development (Azhar et al. 35). Finally, leaders can help to organize the company’s efforts regarding the development and implementation of a strategy (Azhar et al. 36).

Another important effect of leadership is the increased participation of employees in planning and implementation. As pointed out by Brumm and Drury, “Leaders can behave in a way to encourage positive follower behaviors but can also prevent influencing any negative follower behaviors” (27). Thus, leaders can inspire workers and motivate them to support the chosen strategy, which makes implementation easier and more efficient.

Interview Results

As part of this project, I interviewed with a manager who works in a local non-profit hospital. The interview provided many useful insights, some of which supported the research findings described above. For instance, the subject confirmed that strategic planning is widely used in non-profit hospitals and that it can help hospitals to respond to external challenges, such as political and demographic shifts, successfully. Moreover, the respondent agreed that leadership plays a vital role in strategic planning outcomes, particularly due to the leader’s expertise and knowledge.

The respondent also added that leaders could offer new and innovative solutions to internal organizational issues, as they are aware of the latest developments in business and management. However, some of the responses do not align with the literature findings described above. For example, the respondent stated that some companies might opt to use several components of strategic planning instead of applying the framework as a whole, although the success of this practice is not supported by scholarly research.

Furthermore, the interviewee did not see formal stakeholder involvement in strategic planning as important. AHA, on the other hand, stresses that engaging stakeholders in strategic planning are crucial, as it helps the hospitals to improve care, promote innovation, and increase financial efficiency (5). Overall, even though some of the responses were not supported by research on strategic planning, the interview provided a practical view on the topic and offered some important insights. In the future, it would be interesting to interview professionals from other hospitals to determine if their views on the topic are different.

Strategic Planning and the Franciscan Tradition

Although the link between management and the Franciscan tradition is not obvious, the concept of strategic planning can be traced back to the values promoted in Franciscanism. First of all, as discussed in the previous sections of the project, strategic planning is beneficial to all the stakeholders involved. It increases the motivation of employees and lowers stress, facilitating a healthy organizational climate. By increasing the hospital’s productivity, it allows the facility to offer better service and improve the quality of care, which is good for the patients.

Furthermore, the environmental analysis that is performed as part of the strategic planning process increases the company’s awareness of the local community, thus improving the connection and cooperation between the hospital and local people. The Franciscan tradition emphasizes ideas of connectedness when all people coexist in a shared community. This makes strategic planning relevant to Franciscan values. Lastly, by producing several strategic alternatives and evaluating them, companies can ensure that the chosen strategy is ethical and does not harm any of the stakeholders involved. Thus, a thoughtful approach to strategic planning also links the process to the Franciscan tradition.

Conclusion

Overall, this project provided an opportunity to develop my understanding of the core concepts of strategic planning, while at the same time studying it in the context of my work at a non-profit hospital. As evident from research and experiential learning, strategic planning is an effective business tool that can provide many advantages both to the hospital, its key internal stakeholders, and the community. Strategic planning affects not only the firm’s financial performance, but also motivation, employee commitment, and quality of care, which makes the practice beneficial to all parties.

Appendix 1

Introduction: Hello, my name is (*), and I am here to talk to you about strategic planning in a non-profit hospital setting. I would like to inform you that your identifying information, such as name, position, and the company will not be shared in my project, unless with your informed consent. Thank you very much for agreeing to be interviewed.

Q1. Based on your practice, what does strategic planning imply in your organization?

Note: The respondent works as a manager in a non-profit hospital. As this type of organization is the primary focus of my project, I would like to know what strategic planning in these settings involves.

Answer: In my organization, strategic planning involves analyzing different aspects of the business environment to enhance productivity and the quality of services provided. It allows us to cut down costs and respond to external challenges, such as shifts in healthcare policy and competition.

Q2. How widespread is the practice of strategic planning in hospitals and health care institutions?

Note: The answer to this question will help me to understand whether it is a standard practice for hospitals to use strategic planning.

Answer: As far as I am aware, all of the hospitals I worked at use at least several strategic planning techniques.

Q3. What are the benefits of strategic planning for businesses, in your opinion?

Note: The answer to this question can help to determine whether the actual benefits of strategic planning are the same as described in research.

Answer: Using strategic planning techniques ensures that a company’s strategy is efficient, which helps the business to grow and maintain its competitive position.

Q4. What are the effects of strategic planning on human resources and management?

Note: Research suggests that strategic planning can improve employees’ performance and motivation, so I would like to know whether this is indeed one of its perceived benefits.

Answer: Strategic planning gives employees a set plan to guide their work. It also ensures that employees’ work is consistent with the company’s goals and vision, which improves work ethics and organizational climate.

Q5. What stakeholders, besides the management, are involved in strategic planning in your organization?

Note: Response to this question will help to determine whether stakeholder engagement is perceived as important in a non-profit hospital setting.

Answer: We welcome ideas and suggestions from all employees and customers, although I would not say that they play any formal role in strategic planning.

Q6. What do you believe is the key component of a strategic plan that determines its success?

Note: Whereas the success of a strategic plan depends on many factors, I think that ensuring smooth implementation is the most important one and would like to know if that is true.

Answer: In my opinion, making sure that the plan reflects the results of the environmental analysis is crucial to the success of strategic planning, as it helps to create a strategy that enhances the business’ adaptability.

Q7. What would be the possible benefits of involving stakeholders in strategic planning in your organization?

Note: As described by AHA (2015), building a strong partnership with the local community can help the hospital to be more productive and enhance the quality of services provided.

Answer: From my experience, listening to customers’ and local people’s ideas for improvement can help the hospital to identify areas that require special attention, thus possibly improving quality and service.

Q8. What are the main challenges that non-profit hospitals face today, which can be alleviated through the use of strategic planning?

Note: By analyzing the external business environment, the strategic planning process can help hospitals to respond to challenges posed by socioeconomic and market developments. The answer to this question can outline the types of challenges that strategic planning might help to face.

Answer: I would say, political and demographic changes are among the most important challenges to non-profit hospitals. Strategic planning helps to evaluate the effects of these changes on the business and to alter strategy to reduce the potential harm or update services.

Q9. What is the impact of leadership on strategic planning and implementation?

Note: Azhar et al. state that effective leadership can facilitate strategy development and implementation (32), so I want to know whether the perceived effects are the same.

Answer: Company’s leaders usually have extensive experience and knowledge of the company, which allows them to propose effective strategies and solutions. Strong leaders also follow the latest trends and developments in business and management, meaning that they can offer creative and innovative strategies that reduce costs and improve the outcome.

Q10. What types of companies, in your opinion, should refrain from using strategic planning?

Note: While the project focuses mainly on strategic planning in hospitals, it would be interesting to know whether the practice is universal and can be used in any business or not.

Answer: To me, strategic planning is a rather fluid concept that can be tailored to suit the needs of any company. While the formal strategic planning “by-the-book” cannot be used for all business types, some components of it can be altered or replaced to ensure that it applies to any company.

Works Cited

Abraham, Stanley Charles, ed. Strategic Planning: A Practical Guide for Competitive Success. Emerald Group Publishing, 2012.

American Hospital Association (AHA). Leadership Toolkit for Redefining the H: Engaging Trustees and Communities. 2015.

Arasa, Robert, and Peter K’Obonyo. “The Relationship between Strategic Planning and Firm Performance.” International Journal of Humanities and Social Science, vol. 2, no. 22, 2012, pp. 201-213.

Azhar, Arooj, et al. “The Role of Leadership in Strategy Formulation and Implementation.” International Journal of Management & Organizational Studies, vol. 1, no. 2, 2013, pp. 32-38.

Brumm, Christopher A., and Sharon Drury. “Leadership That Empowers: How Strategic Planning Relates to Followership.” Engineering Management Journal, vol. 25, no. 4, 2013, pp. 17-32.

Dibrell, Clay, Justin B. Craig, and Donald O. Neubaum. “Linking the Formal Strategic Planning Process, Planning Flexibility, and Innovativeness to Firm Performance.” Journal of Business Research, vol. 67, no. 9, 2014, pp. 2000-2007.

Kohtamäki, Marko, et al. “The Role of Personnel Commitment to Strategy Implementation and Organisational Learning within the Relationship between Strategic Planning and Company Performance.” International Journal of Entrepreneurial Behavior & Research, vol. 18, no.2, 2012, pp. 159-178.

Mittenthal, Richard A. Ten Keys to Successful Strategic Planning for Nonprofit and Foundation Leaders. N.d.

Rojas-Arce, Jorge, O. Gelman, and J. Suárez-Rocha. “The Methodology for Strategic Plan Implementation.” Journal of Applied Research and Technology, vol. 10, no.2, 2012, pp. 248-262.

Swayne, Linda E., W. Jack Duncan, and Peter M. Ginter. Strategic Management of Health Care Organizations. John Wiley & Sons, 2012.

The Western and Pacific Child Welfare Implementation Center (WPCWI). Stakeholder Engagement: Tools for Action. 2013.

Tiwari, Reena, and Jessica Winters. “The Death of Strategic Plan: Questioning the Role of Strategic Plan in Self-Initiated Projects Relying on Stakeholder Collaboration.” International Planning Studies, vol. 22, no. 2, 2016, pp. 1-11.

Annotated Bibliorgaphy

Abraham, Stanley Charles, ed. Strategic Planning: A Practical Guide for Competitive Success. Emerald Group Publishing, 2012.

This book is an excellent introduction to the role of strategic planning in companies that operate in highly competitive business sectors. Based on secondary research and literature analysis, the authors aim to outline the key steps in strategic planning and explain its importance for businesses. For instance, the researchers explain how strategic planning can help a company to advance its position in the market by enhancing performance and employee motivation, which in turn promotes a higher quality of products and services. Today, the healthcare sector is highly competitive, which makes this book especially relevant to the project.

American Hospital Association (AHA). Leadership Toolkit for Redefining the H: Engaging Trustees and Communities. 2015.

This AHA paper aims to define the role of trustees and communities, which represent the key stakeholders of a hospital, in the transformation process which is evident in the contemporary healthcare industry. The authors argue that the stakeholders play a vital part in improving hospital care. Although the authors do not focus on strategic planning, their findings and arguments can still be applied to this project, especially to the section that considers the role of stakeholders in strategic planning.

Arasa, Robert, and Peter K’Obonyo. “The Relationship between Strategic Planning and Firm Performance.” International Journal of Humanities and Social Science, vol. 2, no. 22, 2012, pp. 201-213.

In this article, the researchers explore the impact of strategic planning and financial performance. They also discuss the steps of the strategic planning process in depth, which is important to the project. Using a mix of quantitative and qualitative methods, the authors analyzed the relationship between strategic planning and performance in 31 companies and found a positive correlation between the variables. This study is useful to the project as it addresses one of the main advantages of strategic planning.

Azhar, Arooj, et al. “The Role of Leadership in Strategy Formulation and Implementation.” International Journal of Management & Organizational Studies, vol. 1, no. 2, 2013, pp. 32-38.

This article is especially relevant to the analysis of the impact of effective leadership on strategic planning, as it aims to determine the effect of leadership on strategy formulation and implementation. The authors stress the crucial importance of efficient leadership and offer a thorough literature review on the topic. The research supports the view that correct leadership practices help to avoid problems in the implementation process and facilitate strategic planning, thus enhancing its outcomes.

Brumm, Christopher A., and Sharon Drury. “Leadership That Empowers: How Strategic Planning Relates to Followership.” Engineering Management Journal, vol. 25, no. 4, 2013, pp. 17-32.

In this paper, Brumm and Drury offer a new perspective on the theory of strategic management by focusing on how the leader’s practices of strategic planning can enhance the empowerment of employees. The quantitative study performed by the authors included 256 employees working in engineering and construction companies; the data were analyzed with the use of statistical tools, such as the Taylor-Lewis index, Cronbach’s alpha test, and Pearson correlation test. The research found that if employees perceived their leader’s long-term planning strategy as effective, they were more likely to feel empowered and show follower behavior. This research adds to the exploration of the role of effective leadership and stakeholder support in the strategic planning process, which makes it useful to this project.

Dibrell, Clay, Justin B. Craig, and Donald O. Neubaum. “Linking the Formal Strategic Planning Process, Planning Flexibility, and Innovativeness to Firm Performance.” Journal of Business Research, vol. 67, no. 9, 2014, pp. 2000-2007.

The authors of the article explore the connection between strategic planning and firm performance, while also affecting the concepts such as planning flexibility and innovativeness. The study presents an extensive literature review, followed by a quantitative study of 448 firms, operating in a wide variety of industries. Using statistical data analysis, the authors found that both formal strategic planning and planning flexibility have a similar positive impact on innovation, which leads to better firm performance. This study is useful to the topic as it offers another perspective on the advantages of strategic planning, suggesting that it leads to innovation and enhances financial performance.

Kohtamäki, Marko, et al. “The Role of Personnel Commitment to Strategy Implementation and Organisational Learning within the Relationship between Strategic Planning and Company Performance.” International Journal of Entrepreneurial Behavior & Research, vol. 18, no.2, 2012, pp. 159-178.

This study aimed to examine how personnel commitment to strategy implementation affects the success of strategic planning in achieving better firm performance. The authors carried out a quantitative study of 160 small and medium-sized enterprises set in Finland. The findings indicate that personnel’s participation in the strategic planning process has a positive effect on the results of the implementation process and can thus help a company to achieve better performance outcomes. The study is particularly relevant to the project, as it highlights the importance of employee involvement in the strategic planning process.

Mittenthal, Richard A. Ten Keys to Successful Strategic Planning for Nonprofit and Foundation Leaders. N.d., www.tccgrp.com/pdfs/per_brief_tenkeys.pdf. Accessed 18 July 2017.

This is a briefing paper that aims to discuss practices and methods that enhance the effectiveness of strategic planning in nonprofit organizations and charities. The author critically examines the definition of strategic planning and its core components, while also emphasizing the importance of shared vision. Overall, this article is useful in examining the components that make strategic planning more effective, and it is particularly relevant to the project due to its focus on leadership and non-profit organizations.

Rojas-Arce, Jorge, O. Gelman, and J. Suárez-Rocha. “The Methodology for Strategic Plan Implementation.” Journal of Applied Research and Technology, vol. 10, no.2, 2012, pp. 248-262.

The purpose of this article is to provide a comprehensive methodology for effectively implementing strategic plans in order to help companies to avoid organizational and functional problems. Based on a qualitative review of previous research studies, the authors offer useful recommendations that the leaders should consider during the strategic planning process. This paper is useful to the project as it outlines the typical problems that the organizations can encounter during the implementation stage and propose ways of preventing and avoiding such problems. The authors also stress the role of leadership in effective strategic planning, which will also be discussed in the project.

Swayne, Linda E., W. Jack Duncan, and Peter M. Ginter. Strategic Management of Health Care Organizations. John Wiley & Sons, 2012.

In this book, the authors aim to outline the core principles of strategic management based on previous scholarly research. The book is a useful overview of the topic, as it explains the components of strategic planning and provides suggestions on how to apply strategic management to health care organizations. This is a useful resource for the project, as it allows to study strategic planning in the context of health care institutions.

The Western and Pacific Child Welfare Implementation Center (WPCWI). Stakeholder Engagement: Tools for Action. 2013, www.cssp.org/publications/general/WPIC_DCFS_Stakeholder_Engagement_Toolkit.pdf. Accessed 18 July 2017.

In this report, WPCWI aims to discuss the issue of stakeholder engagement and how it can help companies and enterprises to grow. Based on secondary research, this toolkit outlines the strategies for increasing stakeholder engagement, such as stakeholder analysis, engagement frameworks, and more. This report will be useful for the analysis of stakeholder involvement in strategic planning, as it explains the positive impact that it can have on the organization. Moreover, the report suggests useful tools for identifying stakeholders and engaging them in the planning process, which can be used as part of the strategic planning framework.

Tiwari, Reena, and Jessica Winters. “The Death of Strategic Plan: Questioning the Role of Strategic Plan in Self-Initiated Projects Relying on Stakeholder Collaboration.” International Planning Studies, vol. 22, no. 2, 2016, pp. 1-11.

This article uses a real-world example of a community development and capacity building project in India to examine the necessity for strategic planning. This is a qualitative research article based on a case study, in which the authors argue that traditional strategic planning might have lost its relevance in the contemporary world. This study can be used to examine the possible impact of strategic planning on an organization. Although the authors state that the lack of a formal strategic plan did not affect the project in an adverse way, they outline some of the ways in which strategic planning could have improved project outcomes, offering a two-dimensional view on the concept.