Planning for Change in Organisation: The Case of NHS of UK - Essay Example

Order 148130 Planning for change in organisation: The case of NHS of UK Introduction An important issue facing governments in the UK, and elsewhere is the improvement in the performance of public service organisations (Boyne 2003, Ingraham and Lynn 2004). Governments have responded to this with a plethora of policies and guidance to public organisations, covering issues such as how to formulate and implement strategies for service provision. This paper discusses some critical determinants of public service performance, and in particular the planning for and implementation of change in organisation that may be necessary to deliver a satisfactory 'volume' of quality service. Joyce (1999) claims that planning change in the public sector is an evolving practice. We discuss and evaluate the validity of this claim, particularly in the context of the National Health Service (NHS) of UK. The discussion is carried out at two levels: first a descriptive assessment of some important theories of organisational change and secondly, an examination of their relevancy to changes in NHS of UK. National Health Service of UK The UK's National Health Service (NHS) came into operation on the fourth of July 1948. It was the first time that completely free healthcare was made available on the basis of citizenship rather than the payment of fees or insurance premiums. The service has been beset with problems throughout its lifetime, not least a continuing shortage of cash. (BBC, 1998). In January 2000, two decades of relative resource constraint on the NHS were ended by the commitment to raise UK health expenditure to the European average. After that commitment there were two ambitious reform plans (The NHS Plan, 2000; Wanless 2002) together with an expressed preference for the UK's unique tax-based system (Wanless 2001). The 2002 Budget raised national insurance contributions to fund a real increase of 43% in NHS spending by 2007-8, thereby raising health expenditure from 6.8% to 9.4% of GDP. Financing NHS For all organisations financing their operations is a prime concern. Health systems have a mix of financing methods such as social insurance, private insurance, out-of-pocket payments (charges, patent medicine etc.) and taxation. In the 1930s, the UK had a conventional mix:90% of the workforce had social insurance, covering the GP service and sick pay, the other 10% and all dependants either had private insurance or made full out-of-pocket payments. The Beveridge Report in 1942 recommended a service that was universal (covering all people) and comprehensive (covering all needs). Bevan nationalized the hospital system in 1948 and made national rather than local taxes to fund the service.In the mid 1950s, the Conservatives questioned the desirability of a tax-funded NHS on ideological and economic grounds. Increased affluence meant most people could, and arguably should, provide directly for their own health care.However, the national insurance contribution was raised three times between 1957 and 1961. This option was favoured because it proved to be an uncontroversial way to raise the needed revenue for public health services.The drive to make the NHS fully, or more fully, contributory was halted in 1962 by Enoch Powell, who as minister of healthlaunched an alternative Hospital Plan, which he described as 'an opportunity to plan the hospital system on a scale which is not possible anywhere else on this side of the Iron Curtain'.The Plan was overhasty, drawn up in four months by Regional Hospital Boards with little experience of, and skills in, long-term planning. It was said to be like 'giving a blind man a stick - it might help but it would not improve his sight'. In the 1980s, there were two attempts to alter the financial basis of the NHS. Both failed and resulted in the explicit re-endorsement of the tax-based system. By 1987, the NHS was near bankruptcy because its income from government was so restricted. A proposed hypothecated health tax, from which people might opt out into private health insurance, was dismissed on the grounds that it would have left the NHS with a heavily reduced income and all the bad risks. Increased charges were rejected as politically unacceptable. Increased tax incentives for private insurance was dismissed as costly, complicating the tax system and unfairly advantageous to the private sector. Mrs Thatcher promised: ' the NHS will continue to be available to all ... and to be financed mainly out of general taxation'. The conclusion of both the NHS Plan (2000, ch 3) and Wanless (2001, ch. 4) that the NHS should remain predominantly tax-financed appears to be historically vindicated. The rejection by the Conservatives of alternative methods between 1957 and 1961, and again in 1982 and 1988, suggests that policy has become 'tradition bound'.National Insurance Contributions have for long been acknowledged as an uncontroversial way to raise taxation.Increased revenue can be raised with least difficulty when there is the perception that value for money is assured. It was such a perception in the 1940s and 1950s which had led the interwar mix of private and social insurance being rejected in favour of a tax-funded NHS. Thus in respect of financing the public sector service organisation of the NHS, Joyce's contention that it is an 'evolving practice' holds good. Apart from funding problems, there are also other matters of concern for a public service organisation such as the NHS. One such concern of importance is that of regulation. (Lowe, Rodney). However, before we discuss that problem, a consideration of some theories of organisational change and their application to NHS is given below. Theories of change In the present discussion of the theories of change in relation to NHS reliance is made on the account of some of such theories given by Valerie Iles and Kim Sutherland (2001). Organizational change sometimes may be a 'planned' one, in contrast to change that occurs in an apparently spontaneous way, known as 'emergent change' (Mintzberg, 1989). Emergent changes may result from managerial decisions unrelated to the change that may emerge, or from external factors such as the economy, competitors' behaviour, and political climate or internal features such as the relative power of different interest groups, distribution of knowledge, and uncertainty. Change may also be episodic or continuous. Episodic change, according to Weick and Quinn (1999), is 'infrequent, discontinuous and intentional'. Continuous change, in contrast, is 'ongoing, evolving and cumulative' and is characterised by constant adaptation and incorporation of ideas from different sources. Change may also be considered in relation to its extent and scope such as developmental, transitional and transformational (Ackerman (1997). Many of the approaches to organisational change seem to posit that change is a rational, controlled, and orderly process. In practice, however, organisational change is seen to be chaotic, often involving shifting goals, and unexpected combinations of changes and outcomes (Cummings et al., 1985; Dawson, 1996). An aspect of change in NHS NHS is a public service system. And a 'system is a set of elements connected together which form a whole, thereby possessing properties of the whole rather than of its component parts' (Checkland, 1981). Players within a system have a view of that system's function and purpose and players' views may be very different from each other. Within the NHS there is an increased awareness of the multifactorial issues involved in health care, which implies that complex health and social problems lie beyond the ability of any one practitioner, team or agency to 'fix'. Pollitt (1993) and Dawson (1999) say that the NHS has three defining features: diversity of stakeholders; complex resourcing arrangements; and professional autonomy of many of its staff. The NHS is a large organisation employing people with a wide range of talents and perspectives. It is also a complex organisation with different cultures and norms, stemming from sources such as 'different needs and expectations of different client groups; the different histories of different institutions; local priorities, resource allocation, and performance management.' Organisational change in the NHS, therefore, involves working with changing pressures in the environment; stakeholders within and outside the organisation; changing technologies available to those stakeholders; complex organisations in which individuals and teams are interdependent. These factors may appear to make any change in NHS to be discontinuous and non-linear, but it cannot be far off from its inherited organisational structure and long accustomed work ethic. And any proposed change, of course, must be interactive and relate research to practice (Ywye and McClenahan, 2000). And here Joyce's contention comes into its own. One harbinger of organisational change is innovation. Green, Howells and Miles (2001), say that the term innovation denotes a process where organisations are "doing something new i.e. introducing a new practice or process, creating a new product (good or service), or adopting a new pattern of intra- or inter-organisational relationships (including the delivery of goods and services)". They go on to say "innovation is not merely synonymous with change. Ongoing change is a feature of most organisations. For example the recruitment of new workers constitutes change but is an innovative step only where such workers are introduced in order to import new knowledge or carry out novel tasks". Change then, is endemic; organisations grow or decline in size, the communities served change, and so too the incumbents of specific positions, and so on. Innovation is also a common phenomenon, and is even more prominent as we enter the "knowledge-based economy". An innovation can contain a combination of some or all of the following elements: new characteristics or design of service products and production processes (Technological element); new or altered ways of delivering services or interacting with clients or solving tasks (Delivery element); New or altered ways in organising or administrating activities within supplier organisations (Organisational element); new or improved ways of interacting with other organisations and knowledge bases (System interaction element) ;new world views, rationalities and missions and strategies(Conceptual element).(Cunningham 2005). All these elements form for part of the constituents of NHS. The process of change engendered by innovation in NHS is gradual, but distinct, partaking of the character of a continuing evolution. The milieu of an organisation: 'PEST' In describing the factors that are required for a sound managerial system and practice, academicians and practitioners have developed acronyms to convey the essence of their thinking. Initially the acronym 'PEST' was devised, which stands for: Political factors - political forces and influences that may affect the performance of, or the options open to the organisation; Economic influences - the nature of the competition faced by the organisation or its services, and financial resources available to it for its operations; Sociological trends - demographic changes, trends in the way people live, work, and think and Technological innovations - new ways of doing things and tackling problems. More recently the acronym has been expanded to 'PESTELI', to include: Ecological factors - the wider ecological system of which the organisation is a part and how the organisation interacts with it; Legislative requirements - originally included under 'political', relevant legislation now requires a heading of its own and Industry analysis - a review of the attractiveness of the industry of which the organisation forms a part. The 7S Model Some writers, Waterman, Peters and Phillips (1980) for instance, have developed some-what a similar approach. They suggested that there were seven aspects of an organisation that needed to harmonise with each other, in order for an organization to be said to be 'organised'. As each of these aspects have words beginning with the letter 'S' this has become known as the '7S Model'. The constituents of the 7S Model are: Strategy: plan of action and allocation of an organisation's resources to reach identified goals; Structure: salient features of the organisational chart (e.g. degree of hierarchy, presence of internal market, extent of centralisation/decentralisation) and interconnections within the organization; Systems: procedures and routine processes, including how information moves around the organization Staff: personnel categories within the organisation, e.g. nurses, doctors, technicians; Style: characterisation of how key managers behave in order to achieve the organisation's goals; Shared values: the significant meanings or guiding concepts that an organisation imbues in its members; and Skills: distinctive capabilities of key personnel and the organisation as a whole. The 7S Model highlights how a change made in any one of the 'Ss' will have an impact on all of the others. Thus if a planned change is to be effective, then changes in one S must be accompanied by complementary changes in the others. The NHS organisation may conform to the 7S model of a business organisation. Any change in such an organisation brought about by an alteration in any one of the 7Ss will necessarily be exemplifying an 'evolving process', because by its very nature and the dynamics of its change, it cannot be a 'revolutionary' one. .A regulatory system The fact that the NHS is tax-funded implies that it is 'cash-limited'. Prices for many services are fixed nationally so that providers compete mainly on the basis of quality and not price. This kind of competition does not bring about the degree of regulation necessary for a 'public service' organisation. Regulations prevalent in other sectors and other healthcare systems might help to put the right checks and balances in the system. And, because health care deals with very vulnerable and dependent people, additional checks are needed. Planning for change should be to promote continuous improvement in quality, fairness, responsiveness and efficiency, and to give incentives for organisations to achieve excellent standards of care. National regulation needs to focus on the standards of quality and safety that are essential to patients, while enabling NHS to be innovative in attracting more patients and with them, if possible, additional resources needed to reinvest in further improvements. But still it needs to be regulated because of certain potential risks elements which impact on quality, fairness, responsiveness and efficiency of the organisations that provide it. The work of regulation is to minimise the risks involved in health care systems and safeguard the interests of patients and service users. Some of the risks relevant to health care systems emanate from monopoly power and asymmetric information. Competitive markets provide incentives to improve quality, but do not necessarily achieve equity of provision either geographically or across all population groups. This is a crucial requirement for health care activities. There has been significant reform of the public sector in the UK since 1979. A wide range of reform initiatives has affected every area of its activity, including central government, the National Health Service and local government. An important feature of these initiatives has been the drive to improve value for money. With this in view many of the 'market-related' executive functions of government such as market testing and compulsory competitive tendering of many operational functions throughout the public sector, the transfer of the previous public businesses into the private sector where this was feasible, and the creation of internal markets, such as in health and education, to replicate competitive environments have been transferred to Next Steps Agencies. (Health reform in England, 2006). 'Philosophy' of reform It is said that the philosophy behind the pubic sector reforms in UK has been that value for money can be best achieved by a separation of the roles between the policy makers and those who deliver it - between the purchaser and the provider. This contract-based system, as it were, gives managers freedom to manage the operations of services, within the policy and resources framework established by the political authorities. Within this framework, however, managers must have incentives to use their freedoms to improve the efficiency and effectiveness of their organisations. In the private sector, this incentive is supplied by the competitive nature of the market --low quality organisations will go out of business. The majority of public sector services, by contrast, does not operate in a competitive environment and therefore does not experience this pressure to improve. The change in the direction of competition needs to be evolved. As experience in these matters is gained greater freedom of choice and action would automatically become part of an organization's power structure. This freedom, however, should provide standards for measuring and publishing organisations' performance, in order to identify good practice and encourage the pursuit of improvements - i.e. benchmarking. Through this approach, the UK should seek to achieve continuous improvement of public services, while retaining public accountability for service provision. The change effected in this instance will, of course, be an evolving phenomenon (Cowper and Samuels 1996). From the above analysis, it is evident that change, unless it is deliberately engineered by external elements by violent means, is usually an evolutionary process, more so in 'conventional and conservative' public sector service organisations like NHS. ________________________________ References Ackerman, L. 1997. 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