CHAPTER 6 Managing people in the health care industry Health care is a dynamic, knowledge-based industry subject to constant innovation and change due to the continuing introduction of new technologies, treatments, processes and different approaches to service delivery. In addition, since the early 1990s successive Australian governments have introduced policies of health sector and workplace reform in the search for more efficient and effective health care services. These policies include new forms of funding, budget cuts, outsourcing and privatisation, and industrial relations change (Stanton et al 2004). Health care is a labour-intensive industry, with the health care workforce representing the largest single component of costs. The health care workforce is highly professionalised, specialised, largely tertiary educated and strongly unionised. Most of the changes to service delivery and patterns of employment involve changes to the way people work (Stanton et al 2004). In a knowledge-based industry, a focus on people management has the potential to reap great rewards. However, in practice, people management is often one of the most problematic and difficult tasks for health service managers (Fitzgerald 2002, Prideaux 1993). Human resource management (HRM) can be defined simply as the management of the employment relationship. However, the management of the employment relationship is in itself a complex one as the employer has many duties and responsibilities. Government regulations, organisational policies and procedures, trade unions and professional associations all influence the relationship between employer and employee. Health organisations are also directly influenced by government policy and direction setting. Public sector organisations often rely totally on government for funding and so the government is the ‘effective’ employer if not the legal employer (Fox 1998). Private sector employers are also influenced by government policy and as they operate within the same labour market as public sector employers they compete for the same skilled staff. Decisions on the wages and conditions of staff in the public health sector can directly influence the wages and conditions of staff in the private sector and vice versa. Despite the influence of the environment, all health organisations are different in that they have their own goals and strategies, and resources and capabilities, and increasingly their human capital is being recognised as one of their key resources. Human resource management theorists stress the strategic role of people management within an organisation and the mutual interdependence and congruence of key organisational variables, including: structure, strategy, management style, culture, and human resource systems and functions (Boxall & Purcell 2003, Guest 1995). This approach is described as strategic human resource management (SHRM) and according to these theorists HRM functions, such as recruitment, selection, performance appraisal, training and development, induction and reward management, should consistently influence employee and management behaviour so as to enable and achieve the strategic plans of the organisation (Schuler & Jackson 1987). In this sense good people management practices can contribute directly to organisational outcomes and performance. A labour-intensive, highly motivated, highly skilled professional workforce, as in the health sector, should be an ideal context for the successful implementation of SHRM practices. However, the empirical literature suggests otherwise. First of all the people side of management has often been ignored in the pursuit of health reform both internationally (Bach 2000) and in Australia (Stanton et al 2004) and little attention has been given to the impact of these reforms on health service staff. Second, the health sector is largely government funded and often organised around a public service traditional HRM model often focusing on following rules and procedures rather than organisational outcomes (Bach 2000), leading to HRM departments being seen as the ‘keepers of the rules’ rather than a source of innovation. Third, it can also be argued that in the public health sector SHRM has been limited as planning horizons tend to be fairly short term and focused on the annual funding round. Furthermore, a change of government can lead to a change of direction that managers have little control over. Finally, health care employers are often constrained in their actions not only because they were subject to the whims of government policy but also because they sit within a wider framework of powerful stakeholders, in particular trade unions and professional associations, and complex industrial relations structures (Bach 2000, Bray et al 2005). The industrial relations framework is one of the most misunderstood and difficult areas of managing people. It is often seen to be concerned with disputes and strikes rather than day-to-day management decision-making. Yet industrial relations is actually about issues that are fundamental to everyone, such as wages and conditions and the way in which work is performed. Industrial relations traditionally refers to the making and administration of workplace rules and decisions. Historically, Australia had a centralised industrial relations system, with such decisions being part of industrial awards made away from the workplace by third parties through a process of conciliation and arbitration (Bray et al 2005). The health sector in particular has come under criticism for being rigid and centralised, as not only were wages and conditions such as holidays and sick leave covered by centralised occupationally based awards, but also issues of labour utilisation, such as shiftwork and staff rostering, were often controlled centrally (Braithwaite 1997). In the 1990s, the policy directions of federal and some state governments has involved a move to decentralisation of industrial relations through enterprise bargaining (Bray et al 2005). Enterprise bargaining refers to agreements between an employer and the employees (generally bargained through a union) over wages and conditions of employment that only relate to an organisation, plant or enterprise. The extent of the development of local bargaining in health care is debatable, as even in the private sector it is possible that a form of pattern bargaining (where a trade union will strike a deal with one employer and seek to replicate that agreement with others) has developed rather than true enterprise bargaining occurring. However, for local managers the changes have a number of implications. Managers need to be aware whether the terms and conditions of their staff are governed by an industrial award or made by an enterprise agreement. To make matters more complicated, some employees in the health sector are employed on individual contracts, some of which are Australian Workplace Agreements and others are common law contracts. Rather than industrial relations becoming more simple in recent years, it has actually become more complex and although the system might have become more flexible it is still a highly legalised process. Also the process requires increased consultation with staff and possibly more involvement at a local level by managers in the decision-making process. In addition, even if most line managers are not involved in the decision-making processes around wages and conditions, they are involved in the day-to-day implementation of such decisions. Managers are also involved in establishing staff rosters, recruitment and management of casual and agency staff, and line management functions including staff welfare and discipline. (For a more detailed discussion of Australian industrial relations and the types of agreements between employers, employees and unions, see Bray et al 2005.) There is some evidence that these centralised and complicated processes do have an impact on HRM at the local level. Barnett et al (1996), argued that the centralised industrial relations framework limited the SHRM function in South Australian hospitals who largely carried out a regulatory ‘personnel’ function. However, it is not only industrial relations structures that limit the development of SHRM. The researchers also noted that there often existed contested ownership within the senior management structures with some hospital managers not willing to allow a strategic role for the HRM department. A survey of the Victorian public health sector (Bartram et al 2004) found that there were significant differences between the practice and understanding of SHRM from chief executive officers, human resource directors and general functional managers’ perspectives. General functional managers were significantly less likely to report the adoption of SHRM practices (defined as linking people management practices to performance) relative to the other managers. Instead they suggested that their organisations only prioritised recruitment and selection, and the training of health professionals. In other words, the traditional narrow personnel functions. In theory, innovative people management practices provide great promise for people-rich organisations and industries (Bartram & Cregan 2001, McDuffie 1995). A more proactive approach to people management has much to offer the health sector and in a context of fiscal pressures, successful not-for-profit organisations can benefit from innovatory service methods with proactive, multiskilled workers (Boxall & Purcell 2003). Recent studies have highlighted the need for innovation, particularly through better people management practices suggesting these can directly support other goals such as providing a quality and safe service (Dwyer & Leggat 2002, Stanton 2002). Likewise, case studies of high-performing organisations have consistently pointed to effective people management as a critical factor in the success and performance of those organisations. The high-performance paradigm has come to be promoted as the latest incarnation of SHRM, and offers the promise of performance yields above those associated with more traditional employment relations practices. The main features of a high-performance workplace are the design and implementation of a set of internally consistent policies and practices that ensure an organisation’s human capital contributes to the achievement of its business objectives — via compensation systems, team-based job designs, flexible workforces, quality improvement practices, and employee empowerment and participation (Huselid 1995, Lado & Wilson 1994, Wright & McMahan 1992). According to its proponents, such ‘bundles’ of high-performance practices can influence employees to greater levels of performance by enabling and motivating workers to develop, share and apply their knowledge and skills to organisational problems. In practice, high-performing organisations are those that can recruit people with the right mix of skills and abilities, motivate them to perform well through a series of integrated and collaborative HRM strategies and processes and then evaluate the effectiveness through measurement and review. A number of international studies have attempted to link people management practices to improved organisational outcomes in acute hospitals. In the United States there has been considerable research on the antecedents and outcomes of ‘magnetic work environments’ in the health sector (Aiken et al 2000, Kramer & Schmalenberg 2004, Upenieks 2003). ‘Magnet’ hospitals focused on hospitals that attracted and retained nurses through their people management practices; namely through empowering nurses via expanding their responsibilities, creating new educational opportunities and enhancing self-esteem (Aiken et al 2000). Furthering this research, Upenieks (2003) examined whether magnet hospitals continue to provide higher levels of job satisfaction and empowerment among nurses when compared with non-magnet hospitals. She found that nurses employed at magnet hospitals experienced higher levels of empowerment and job satisfaction due to greater accessibility of magnet nurse leaders, better support of clinical nurse autonomous decision-making by magnet nurse leaders and greater access to work empowerment structures (e.g. opportunity, information and resources). Moreover, a large body of research has illustrated that magnet hospitals are associated with greater quality of patient care, higher staff job satisfaction and lower burn-out rates and greater staff retention (Aiken et al 2000, Bolton & Goodenough 2003). A study by Kramer and Schmalenberg (2004) of staff nurses working in 14 magnet hospitals identified eight attributes as essential to quality care, similar to the attributes reported by Aiken et al (2000). These attributes are: support for education; working with other nurses who are clinically competent; positive nurse/physician relationships; autonomous nursing practice; a culture that values concern for the patient; control of and over nursing practice; perceived adequacy of staffing; and nurse–manager support. West et al (2002) in their study linking people management practices to performance in hospitals in the UK found the three key components were training and development, performance appraisal and teamwork. The researchers found a link between these specific practices and lower patient mortality. From a range of both HRM and health sector literature between these specifi c practices and lower patient mortality. From a range of both HRM and health sector literature we have summarised the key features of good people management practice as: In the health sector finding the right people (i.e. appropriately qualified, skilled and experienced) at the right time in the right place has become a major issue for governments and health care organisations and there has been a great deal of attention by governments in Australia to the wider aspects of workforce planning in the health sector, particularly in relation to the medical and nursing workforce (Duckett 2000). This is becoming more imperative as shortages of major specialties, such as nurses and radiographers, begins to have an impact. The Australian Government through its National Health Workforce Secretariat has established a strategic framework for workforce planning. This includes outlining present and future changes to the health system that impact on the health workforce, collecting data on the health workforce and creating a vision and identifying principles to guide health workforce planning throughout Australia (Australian Health Ministers’ Conference 2004). The states and territories too have begun to take workforce planning seriously and have identified their own strategies (see for example Western Australian Ministry of the Premier and Cabinet 2000). However, human resource planning at the organisational level is often a different story. Essentially human resource planning is about translating organisational objectives into the types and numbers of people needed to meet these objectives. This can involve sophisticated methods of forecasting the supply and demand of staff through both internal and external environmental scanning followed by the development of programs and policies to meet staffing needs (Nankervis et al 2005, pp 80–1). Despite the importance of staffing for health organisations Stanton et al (2005) found that health organisations still tended to see human resource planning as a government responsibility and not a high priority for them. Most had, however, developed sophisticated recruitment and selection processes and these processes often were supported by government recruitment campaigns. Finding the right person for the job is essential to good management, yet it can be a difficult task. There are particular difficulties with regard to recruiting and selection in the health sector, including labour shortages (e.g. nurses, radiographers), recruitment to rural and remote areas, and lack of specialised skills (e.g. critical care nurses, psychiatrists). Inequity across health industry sectors also exists where particular sectors have difficulty attracting and retaining highly qualified and skilled staff; for example, in the aged care sector (Australian Health Ministers’ Conference 2004). Some of these difficulties can be solved only by government action, such as increasing the numbers of undergraduate places, recruiting from overseas, or providing incentives to attract staff to further education or to work in rural and remote areas. The Australian Nursing Federation (ANF) suggests that improved pay and conditions are more valuable incentives in encouraging nurses back into the health sector (Considine & Buchanan 1999), but again this strategy relies on government action in providing increased funding. One area of human resource planning that has received little attention in recent years in the health sector is succession planning. Succession planning is the process of planning for replacement of management vacancies (see Nankervis et al 2005). As the demands on health sector managers become more intense, the need for managers who can meet modern management challenges becomes essential. In general industry, large companies often take management development very seriously. Succession planning can involve the development of job profiles and replacement charts (a visual ‘map’ of who will replace whom when positions become vacant). It can also involve the establishment of management development programs and individual mentoring. As Townsend and Allen (2005) point out in their study of a Queensland private hospital, it is not enough just to have good recruitment policies — the aim is also to retain staff through a range of interventions and individual health organisations do have some strategies open to them to do this. An organisation that has a culture that values its staff and considers them assets to be nurtured and supported, and implements policies that do that, is likely to have a lower staff turnover than one that considers staff are there to be exploited. An increasing number of organisations are examining their ‘organisational health’ and considering how their policies can positively affect staff health and wellbeing. (See the previous discussion on ‘magnet’ hospitals.) One approach to creating a healthy working environment is through providing transparent systems and processes where people are judged on merit. Australia, New Zealand and most Asia–Pacific region countries have anti-discrimination legislation that prohibits discrimination in employment based on certain characteristics (Kramar 1995). Depending on the country or state, these characteristics can include age, impairment (disability or disease), sex or sexual preference, race, religious belief or activity, political belief or activity, marital status, pregnancy, physical features and industrial activity. It is prohibited to discriminate either directly or indirectly on the basis of these attributes in determining who should be offered or refused employment, terms of employment (e.g. pay or hours), denying or limiting access to opportunities for promotion, transfer, training or benefits, or termination of employment. Equal employment opportunity (EEO) procedures may include codes of conduct, grievance procedures, and a complaint mechanism that allows complaints to be investigated thoroughly with fairness afforded to both complainant and alleged offender. Equal opportunity policies play an important role in retaining good quality staff, as they can promote a culture of fairness and a working environment free from discrimination and harassment. Another important area in relation to retaining staff is the provision of good working conditions and a safe and healthy working environment. In Australia, state/territory legislation generally follows the Robens model, although there are some differences in application (De Cieri 1995). For example, legislation in New South Wales and Victoria imposes broad general duties on both employers and employees, and encourages the development of workplace consultative structures through health and safety representatives and committees. This has also led to more organisations developing their own health and safety policies suited to their own environment. The implementation of occupational health and safety policies and procedures is still frequently managed through an annual planning and external audit process, often as a key facet of accreditation (see Australian Council of Healthcare Standards 2003, The Equip Guide). The health sector is not immune to health and safety problems. Nurses suffer from high rates of back injury due to lifting patients. Staff in emergency departments and those working in outreach positions in the community often find themselves confronted by violence. Health care staff have to deal with trauma and consumers who are extremely distressed and emotional. Greater throughput in departments can lead to work intensification and stress, which can sometimes be expressed as aggression towards fellow workers. Allan’s study (1998) into a Queensland public hospital found increased work intensification led to a decline in staff motivation and morale. Weekes et al (2001) investigated medical scientists in Victoria and found increasing work intensification, with workers complaining of greater stress levels and ill health. A report by the ANF, also in Victoria, found that nurses were leaving the industry due to worsening working conditions (Considine & Buchanan 1999). Bartram et al (2004) study of 172 nurses working in a private hospital found that empowerment (increasing autonomy, impact, meaning and competence) and supervisory and collegial social support were associated with reducing occupational stressors and reducing their intention to leave the organisation. Good health and safety practice is of value to everyone, and health and safety problems are an organisational issue, not an individual issue. Rehabilitation and re-employment of injured workers is an increasingly important component of the management of health and safety in organisations. As with every other issue in HRM, the manager needs to have a broad understanding of the relevant legislation, to have a good knowledge of the organisation’s policy and procedures, and to know where to seek information. Importantly, good problem-solving skills, and an understanding that good health and safety practices can lead to a healthy organisation that is beneficial to staff and consumers, are vital. Another issue of relevance here is the increasing emphasis on work–life balance, flexible working arrangements, and the provision of other benefits, such as access to on-site child care, good canteen facilities and adequate car parking. Health organisations are often competing against each other for good quality staff. Those who do not pay attention to working conditions will soon find that their staff vote with their feet. Critical to retaining staff is acknowledging and responding to employees’ needs for balance between work life and non-work life. Lumley et al (2004) found that nurses often chose to work casually because it gave them more control and greater flexibility over their working lives.
INTRODUCTION
THE PROMISE OF HUMAN RESOURCE MANAGEMENT IN THE HEALTH INDUSTRY
What is strategic human resource management?
Barriers to strategic human resource management
CREATING A HIGH-PERFORMANCE WORKPLACE IN HEALTH CARE
Building a high-performance organisation
Attracting the right people
Creating a healthy working environment
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Managing people in the health care industry
