Administrative theory attempts to address the domains of administration and management: planning, organizing, staffing, directing, coordinating, reporting, and budgeting.⁵ Some of these areas deal with individual dynamics, group dynamics, and the impact of social settings. The psychiatrist may have an advantage over other administrators in already having been schooled in some of these areas. On the other hand, a psychiatrist who does not appreciate that individual psychologies do not fully explain the functioning of individuals in groups and organizations will be handicapped by that lack of understanding.

There is a stunningly large array of books and treatises on administration and management. This should not be taken as a reason to exempt oneself from learning about the area but rather as evidence of its complexity. Although mental health professionals are educated in the areas of individual and group dynamics, the education rarely extends into large group, intergroup, and organizational dynamics.⁶ Knowledge in all five areas may be necessary in order to fully understand a situation.

Many books on management purport to be the final answer even as they fail to address all the tasks that need to be included. It seems that the approaches that claimed to be “scientific” were proposed during periods of relative stability.⁷,⁸ As all organizations—not-for-profit, for-profit, manufacturing, service, financial, local, national, international, and global—have found themselves in turbulent times, each theory has failed to anticipate all the trends and resultant challenges and to provide enlightenment on those challenges. Although there had been a search for a science of management and administration, there has been an evolving acceptance that there will be no grand unifying theory. “Contingency theory” suggests that one simply pick the theory that seems to fit the situation best. However, no guidance is provided as to how to select which theory fits best. Theories that stress only one or two perspectives are unlikely to endure in their ability to capture the elements important in a rapidly changing world.

There are attempts to bring together multiple perspectives into a coherent whole. One of the most popular, probably because it integrates multiple perspectives with modern information systems technology, is the balanced score card.⁹ This model has evolved as the business environment has changed.¹⁰,¹¹ Paralleling the familiar multidisciplinary treatment plan, it suggests that minimally an organization identify goals and objectives in four domains: fiscal, internal business processes (quality and efficiency), customer satisfaction, and learning and growth (staff development). This model contrasts with many other ones in that it raises at least these four domains to priority status. However, the knowledge regarding management and administration is fragmentary and its value linked to the specific organizational circumstances to which it is to be applied. Whereas some of the proposed principles appear to be universal, others are constrained by context.

Some of the principles that were articulated in mid-20th century are now accepted as truisms. For example, as a general approach to management of people, the traditional “command and control” approach is rarely endorsed, except in an emergency situation.¹²,¹³ The command and control model assumes that individuals need clear direction and oversight, that without such oversight they are likely to slack, and that most people view work as a burden. Current models encourage a positive view of supervisees and their attitudes toward their work, resulting in a collaborative relationship between supervisor and supervisee.¹³ Furthermore, the importance of focusing on the institution’s goals and objectives, and orienting one’s efforts toward those goals, is generally accepted practice.¹² This approach is the familiar “management by objectives” (which also finds expression in the structure of multidisciplinary treatment plans).

Familiarity with basic concepts relevant to administration helps clarify one’s thinking regarding administrative puzzles. An understanding of leadership—its basis, the types, and situational aspects—helps one understand dynamics more effectively. As with administrative theory, literature on leadership abounds.¹⁴,¹⁵ Different styles of leadership are suitable for different situations, and understanding the theories can help decide when to utilize each.⁸,¹⁶ Having a cognitive understanding of the different types of leadership helps one develop the skills utilized by each of them. Motivation of individuals—its basis, categories, and relationship to organizational structure—is central to effective administration.¹⁷, ¹⁸, ¹⁹ No single theory fully explains what motivates individuals in organizations. Again, some familiarity with the various approaches can help supervisors and supervisees understand their responses to work situations. It may also permit the design of more effective systems. Alternatively, it may help identify the proper source of low morale. In general, most administrators utilize a style of leadership that attempts to engage and enlist others, as opposed to casting forth edicts. Sometimes one needs to go through a progression, moving from the inspirational, to the transactional, and then the punitive mode.

Hospitals are constituted of complex, overlapping—and oftentimes conflicting—hierarchical bureaucracies that operate in a highly regulated and competitive environment. “Hierarchical” implies that power is not evenly distributed, that some individuals and departments have more power than others. “Bureaucracy” implies structure as well as rules for interacting among components of the structure.²⁰ These rules coordinate the performance of certain activities and are the policies and procedures of the organization. One of the complicating factors in professional organizations is that other rules may also apply, such as professional ethics, which may appear to conflict, or may in fact conflict, with organizational rules. The regulations that affect hospitals come from a broad array of sources, many of which are indifferent to potential conflicts. The competitive and regulatory environment has resulted in many hospitals teetering at the edge of fiscal solvency. Hospitals are frequently one of the largest local employers and have large budgets, but the net excess margin or profit is typically very small, if any. Competition amongst providers has led to various alliances and contracts meant to insulate the institution from the payers—commercial insurers and managed care. It is not uncommon now for negotiations between provider groups (hospitals or doctors) and insurers to reach impasses, and letters are sent to patients that the providers will not accept their insurance as of a certain date. Each side accuses the other of greed and the negotiations often do not reach a settlement until the last moment. These events do little to curry favor with the patients who have a foot on each side of the battle—their providers and their costs to bear.

No law dictates that rules and hierarchies within an organization make sense or are functional. In fact, the overlapping of the structures may create inherent tensions. Hospitals are constituted of separate departments with different tasks and needs: fiscal, human resources, supportive services, and clinical staff. The clinical staff is usually divided by profession and discipline. The interplay within and among the departments directly affects the clinician and patients. Lack of knowledge regarding administrative theory and thus how the dynamic processes play out often leads to erroneous conclusions about events and then to personal distress. Better awareness of the structure, function, and dynamics of organizations can render one’s experience comprehensible and facilitate more effective choices and decisions. As a result, it is also likely to improve patient care.

Failure to understand administration may lead to incorrect conclusions regarding patients, staff, and components of the organization. The interplay between patient behavior, staff behavior, and administration is well documented in such classics as The Mental Hospital, The Psychiatric Hospital as a Small Society, and The Sharing of Power in a Psychiatric Hospital.²¹, ²², ²³ Although these works are dated, there is no reason to believe that problems and processes similar to what they describe are not operative currently. In fact, there has probably been a loss of knowledge of milieu and hospital dynamics as clinicians are currently pressed with taking care of sicker patients and processing them more quickly. Much more attention is paid in residency training to neuropharmacology and genetics than to organizational dynamics as they affect patients and staff.

Another area in which an appreciation of administration is important is in personnel management. If one does not appreciate the need for the human resources department to have policies and procedures for corrective actions to be taken with staff, then the administrative personnel are easily vilified for not responding quickly enough to dysfunctional staff behaviors. If one does not understand the nature of the budgeting process, then it is easy to declare inappropriately that the administration is unsupportive and cheap, but one will also be ineffective in obtaining resources one needs. These situations are common and often contribute to avoidable disgruntlement amongst staff.

Progressive discipline is the process in which attempts are made to rectify problems while protecting the rights of both employer and employee. It entails counseling as well as increasing sanctions of greater severity in order to achieve a desired goal. Counseling by the supervisor to help the employee achieve the goals is a critical component. The focus should be on salvaging an employee in trouble, not punishment. However, if the employee does not improve sufficiently to meet the agreed-upon standard, then termination of employment is the ultimate step. Institutions should have explicit steps to guide supervisors along the process.