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Abstract
Organizations apply a range of tools to analyzing their performance, measuring its current quality, and identifying the necessary improvements. Among those are the 7-S framework, the balanced scorecard (BSC), the SWOT paradigm, and its PESTLE equivalent. Using each of these separately enables resolving particular issues but leaves gaps, for which reason the analysis based on a single technique apparently is insufficient. The sphere of healthcare, meanwhile, changes quite rapidly, calling for permanent awareness and maximal flexibility. Therefore, firms that perform in it should utilize several techniques in parallel to extend and deepen the perspective on their own activity as well as market position. The paper examines the peculiarities of each tool and investigates their combinability.
Introduction
Analyzing the performance of a business requires various tools, each of which investigates a certain area or issue and serves to accomplish particular goals. Due to such specification, assessment outcomes inevitably are limited in demonstrativeness and precision. To smooth this, it is reasonable to combine several techniques in analysis, so that they compensate for the drawbacks of each other, which the paper seeks to exemplify.
Expanded 7-S
The 7-S framework, or the McKinsey model, analyzes the arrangement and performance of companies by measuring the alignment of their key elements. Those are structure, strategy, systems, style of management, shared values, or culture, staff, and skills, which seven actually form the acronym (Jurevicius, 2021). In addition, as Cox, Pinfield, and Rutter (2019) mention, the digital era modified the paradigm, having added information policies to it. In this expanded form, the 7-S remains helpful for analyzing organisational design of firms that perform in various spheres.
Healthcare management is not an exception; similar to any administrative field, it focuses on corporate hierarchy as well as the relations both among and within its levels. Furthermore, healthcare as an industry is quite dependent on economic perturbations and, therefore, needs integrity and adaptability to survive those (Krishna et al., 2019). The 7-S model, meanwhile, allows for monitoring these parameters on a permanent basis and the timely discovery of the existing gaps, which, in turn, enables compensating for them in a short time frame.
Merits
The wide room for alignment actually is in the list of the key advantages the model has. Notably, it analyzes the existing interconnections among the elements of organizational design, and the outcomes help identify the necessary steps for adopting an innovative policy or strategy (Kocao lu and Demir, 2019). Subsequently, it is possible to state that the use of the 7-S improves the companys performance. Furthermore, a structural evaluation enables anticipating the future directions of the firms activity, adding to the awareness of possible changes and readiness to them.
Demerits
Notwithstanding the above strengths, the 7-S framework does not involve all aspects of the environment that may influence business performance. Specifically, it focuses on internal factors, while external, such as political, economic, cultural, or other remain beyond its scope (McKinsey 7s framework example, 2022). Healthcare management, meanwhile, should consider those, as the industry it governs is to respond quickly to any processes that occur in the society. This determines the need for a more dynamic model in comparison with the 7-S, which is static by nature.
Balanced Scorecard
The balanced scorecard (BSC), another strategic tool, has a form of a performance metric, in other words, measures business functions as well as their outcomes. It is applicable, therefore, to assessing the implementation of a certain strategy or policy; in addition, its use presupposes providing feedback to the organization (Tarver, 2021). The latter nuance enables the BSC to close the gaps of the 7-S model. Notably, the paradigms state interconnectedness and insist on a multidimensional approach while focusing on the different but tightly intertwined sides, internal and external (Kaplan, 2005, p. 42). This favors their alignment, which, in turn, enables designing a maximally complex analytical framework.
In healthcare management, such tools are of special importance since the peculiarity of this industry is the large amount of stakeholders, each of which is interested in quality. This not only increases the firms responsibility, but also may cause cultural misalignment, or the conflict of values, where each participant pursues the own interest (Kaplan, 2020, p. 1). Meanwhile, such method as the BSC can enable and catalyze finding a middle course, which determines the need for them in healthcare. It is essential to consider, however, that regarding initially non-profit organizations, to which hospitals belong, through the lens of their financial performance means a closer connection to the commercial sector (Khiew et al., 2017). In case of not reaching the proper balance, this can transform the entire organizational philosophy. Therefore, medical institutions currently are quite meticulous about implementing the balanced scorecard.
Merits
Doubtlessly, the main advantage of the given tool is its ability to structure business, reviewing and systematizing both the design and the performance of a firm. The activity of medical institutions, as Amer et al. (2022) mention, may lack consistency, which reduces patient satisfaction, while adopting the BSC adds to it. In addition, this approach facilitates communication, especially among the levels of professional hierarchy, whose lack is known to be the frequent problem in hospitals that causes medical errors (Street et al., 2020). Finally, better awareness of organizational vision and goals, which the BSC provides, fosters unity and motivates.
Demerits
Since the balanced scorecard evaluates the performance of a particular organization, it has to be customized to the maximal possible degree to allow for adequate outcomes. This is another reason why hospitals adopt it very carefully (Khiew et al., 2017). Notably, the implementation requires much time and may be subjective, as neither the experience of other firms nor any tips or criteria are universally applicable.
SWOT Analysis
The acronym SWOT stands for strengths, weaknesses, opportunities, and threats, which parameters this tool actually measures. Its main specialty is diversification; notably, internal and external factors are equally considerable (Chapman, 2005). Therefore, this type of analysis focuses on both the specialties of the industry or market and the current position of a certain organization in it. This is relevant in healthcare management because, as said above, the performance of many medical institutions needs systematizing to improve patient satisfaction. In addition, SWOT helps reveal the challenges the company is facing, which can be quite numerous in such a competitive and rapidly developing sphere as medicine (Siddiqui, 2021). The latter nuances are among the main reasons why medical organizations utilize this tool.
Merits
The versatility of SWOT analysis is its most meaningful advantage; it allows for a multidimensional assessment of the existing situation. The scheme to follow, however, is quite simple as well as illustrative, which makes the outcomes extremely helpful in identifying the areas of improvement and further development (Gandolf, n.d., para. 5). In other words, the SWOT framework can serve as a reference point in strategic thinking, explaining the basic principles of it and setting the directions.
Demerits
Notwithstanding its multifacetedness, the scope of SWOT analysis remains quite limited. Thus, it does not consider the performance of other companies that can bear additional threats as well as opportunities for the given. In fact, this results naturally from attempting to cover a maximum of factors in parallel, which behavior often leads to excessive generalization and simplification. It is reasonable, therefore, to combine SWOT with similar but more specific tools that consider particular types of opportunities and threats separately.
PESTLE Analysis
The most influential determinants of business performance are political, economic, sociological, technological, legal, and environmental. These six form the acronym of PESTLE, the name of the tool that frequently is used in a collaboration with SWOT for additional precision. Considering the mentioned high dynamicity of the healthcare industry, the activity of medical institutions apparently depends on a range of factors, each of which requires attention.
Merits
Doubtlessly, the key benefit of PESTLE analysis is the deep insight into business environment it provides. The outcomes involve not only the examination of the existing situation, but also assumptions on its future development, enabling the firm to adjust its performance accordingly (PESTLE Analysis, 2021). It is possible to state, therefore, that SWOT creates the base PESTLE then expands and specifies, adding to the resulting visual clarity of performance analysis.
Demerits
Although PESTLE improves the quality of the data on which assessment rests, their quantity not necessarily is proper. Specifically, it is possible to apply insufficient or, contrariwise, unnecessarily rich and detailed information, which leads to so-called paralysis by analysis; in both cases, the outcomes are unrealistic (PESTLE Analysis, 2021, para. 17). Considering this, it may be necessary to repeat the assessment several times and conduct it regularly to minimize such mistakes.
Conclusion
The above shows that all of the analytical tools available for healthcare management companies have both strengths and limitations. As the latter may be quite serious, the most reasonable strategy lies in combining several techniques, whose advantages can complement each other, closing the gaps. Bright examples of such a solution are the integrations of the 7-S framework with a balanced scorecard and of SWOT with PESTLE.
Recommendations for Change
It has been mentioned that, although BSC can compensate for the drawbacks of the 7-S, medical institutions believe that implementing it bears the threat of commercialization. This calls for finding a balance between finance and ethics, which task is quite challenging. SWOT and PESTLE in a combination, however, can simplify it by exploring and describing the determinants of the companys performance, both at the current stage and in prospect. In fact, a possible key to successful healthcare management is integrating the most useful elements of the tools the paper describes into a single coherent system.
Reference List
Amer, F., Hammoud, S., Khatatbeh, H., Lohner, Sz., Boncz, I., and Endrei, D. (2022) The deployment of balanced scorecard in health care organizations: is it beneficial? A systematic review, BMC Health Services Research, 22, article 65. Web.
Chapman, A. (2005) SWOT analysis. Web.
Cox, A.M., Pinfield, S. and Rutter, S. (2019) Extending McKinseys 7S model to understand strategic alignment in academic libraries, Library Management, 40(5), pp. 313-326. Web.
Gandolf, S. (n.d.) SWOT: The high-level self exam that boosts your bottom line. Web.
Jurevicius, O. (2021) McKinsey 7S model. Web.
Kaplan, R. S. (2005) How the balanced scorecard complements the McKinsey 7-S model, Strategy & Leadership, 33(3), pp. 41-46. Web.
Kaplan, R. S. (2020) Using the balanced scorecard for successful health care M&A integration, NEJM Catalysts Innovations in Healthcare Delivery. Web.
Khiew, K.-F., Chen, M.-Ch., Shia, B.-Ch., & Pan, Ch.-H. (2017) Adapting the balanced scorecard into the healthcare industry: A literature review, new insight and future directions, Open Journal of Business and Management, 5(4), pp. 611-623. Web.
Kocao lu, B., and Demir, E. (2019) The use of McKinsey s 7S framework as a strategic planning and economic assessment tool in the process of digital transformation, Pressacademia, 9(9), pp. 114-119. Web.
Krishna, A., Martin, C. P., Repasky, C., Singhal, Sh., and Zhao, S. (2019) Recession and resilience: Preparing for the next economic downturn, in McKinsey & Company, McKinsey on healthcare: Best of 2019. Detroit: McKinseys Healthcare Systems and Services Practice, pp. 83-87.
McKinsey 7s framework example: Advantages and disadvantages of McKinsey 7s (2022) Web.
PESTLE analysis (2021) Web.
Siddiqui, A. (2021) SWOT analysis (or SWOT matrix) tool as a strategic planning and management technique in the health care industry and its advantages, Journal of Biomedical Science, 40(2), pp. 1-8. Web.
Street, R. L., Petrocelli, J. V., Amroze, A., Bergelt, C., Murphy, M., Wieting, J. M., and Mazor, K. M. (2020) How communication failed or saved the day : Counterfactual accounts of medical errors, Journal of Patient Experience, 7(6), pp. 1247-1254. Web.
Tarver, E. (2021) Balanced scorecard (BSC). Web.
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