Proponents of the institutional model of organization theory claim that organizations pursue their own distinctive interests subject to certain constraints
Proponents of the institutional model of organization theory claim that organizations pursue their own distinctive interests subject to certain constraints. Those seeking an explanation of organizational development must first determine the interests of lead actors who establish policy and devise strategies for institutional survival. They must then assess the effect of constraints that limit the ability of organizations to pursue their own interests (Sundean et al., 2017). Analysis of the contexts in which constraints arise establishes the trajectory of organizational growth and development.
Board chairs play a key role in setting the tone and bridging the relationship between the board and CEO. While some governance experts clearly demarcate the role of the board and CEO, others posit that successful board/management relationship is dependent on productive board/CEO engagement. The board/CEO roles are often treated as universally comparable; however, this assumption is increasingly criticized. Research on the Chair/CEO relationship has demonstrated each relationship is as unique as the two individuals who occupy each respective position (Cornforth, 2012). A number of factors shape the board and CEO’s roles and within this context each incumbent discerns the nuances and subtleties of their role.
With the emergence of new forms of governance, the traditional roles and functions of boards are under scrutiny. Renz (2012) maintained that while boards continue to be important, they are not necessarily the appropriate unit of focus to address primary community issues and problems. Boundaries are increasingly blurred and it is challenging to discern where the work of one organization begins and another ends (Renz, 2012). Governance transcends the traditional board domain within a healthcare organization and encompasses informal networks, linkages, broader regional networks, and inter-organizational collaborations at the local and national levels (Renz, 2012). It may also involve public, private, and third sectors and their iterations of governance. Overall, while boards are responsible to determine the organization’s strategic direction or make major financial decisions, the knowledge, information, and time regarding various strategic options resides within staff expertise and knowledge (Cornforth, 2012). As a result, governance functions often transpire through board/staff interaction.
By focusing on organizational interests, the institutional model affirms the role of professionals and administrators in shaping political outcomes. According to Sundean et al. (2017), boards hire administrators, investigators, and attorneys to manage an expanding workload. These ‘new class’ professionals altered board structure and policy. They introduced hierarchical controls and recast the agenda to reflect consumer interests. They also looked to national organizations, such as the Federation of State Medical Boards, for help and guidance. Organizations moderate external demands to forge compromises among dominant and subordinate groups. Such compromises are apparent in policies that balance professional goals of rehabilitation and confidentiality with consumer desires for punitive action and disclosure of derogatory information. Administrators, investigators, attorneys, hearing officers, and other non-physicians are thus now prominent players in the disciplinary process. They, too, evaluate professional work based on standardized criteria of performance (Sundean et al., 2017). Though doctors still occupy a majority of board seats, they share decision-making authority with non-physicians.
The institutional model seeks to compensate for changing leadership and shifting constituencies through consideration of structural constraints. Leaders are unable to do as they please. They must play according to the rules and within the boundaries that government, private corporations, and powerful professions establish. Moreover, conflict among various groups may alter the rules and boundaries that channel organizational development.
Cornforth, C. (2012). Nonprofit governance research: Limitations of the focus on boards and suggestions for new directions. Nonprofit and Voluntary Sector Quarterly 41(6): 1117-1136.
Sundean, L.G., Polifroni, E.C., Libal, K., & McGrath, J.M. (2017). The rationale for nurses on boards in the voices of nurses who serve. Nursing Outlook. Retrieved from https://doi.org/10.1016/j.outlook.2017.11.005.
Renz, D.O. (2012). Adding a few more pieces to the puzzle: Exploring the practical implications of recent research on boards. The Nonprofit Quarterly 10(4): 22-29.