My mission statement

The times we are working in now need a great deal of accelerated change and there must be no negotiating that down. So my mission statement for this part of my consultancy career is to be clear that there needs to be and will be a lot of change from the work that I do with individuals and organisations and if organisations don’t want that, then it is probably best to go somewhere else.

Read my statement in full »

Employees: – thinking and act as owners do

Filed Under (Employee ownership, Foundation Trusts, Public service reform, Reform of the NHS) by Paul on 04-03-2010

If some of this post reads oddly it’s because it reports on a seminar that was held under Chatham House rules. These rules mean members of the seminar are not allowed to say what someone said at the seminar but you are allowed to say that it was said. This allows people to say what they think without fear of attribution leading to a consequently free-er discussion.

The seminar was one of a series (rather fetchingly called “policy salons”) run by the excellent Nigel Edwards of the NHS Confederation. (The salon was an 18th century device where people would turn up to a famous person’s house and develop opinions there. At the time it was one of the ways in which some of the most advanced thinkers could think different thoughts and explore different ideas without being sent to prison).

In truth these seminars are not as edgy as that but they do bring together practice, policy makers and academics to describe how issues can be developed with these three different approaches.

This week one was held on employee ownership in the NHS.

For me this is an important issue for two reasons.

First we do not have a plurality of different models for delivering NHS care. In fact the organisational models we have are very restrictive. 10 years ago in both acute care and in mental health, the trust was the only form of organisation that provided NHS care in those areas. The Foundation Trust became a new organisational form and increasingly private providers deliver health care within those areas. But we all know how difficult it was to construct those organisational forms and what conflicts there were.

Whilst secondary care has been organised around the large state-owned institution, primary care has developed as a small business model. In primary care GPs have organised themselves around a model of partnership organisation and, whilst there are more and more salaried GPs, most of them work for partnerships. It is true that GPs are sizing themselves up into bigger organisations, but the organisational form is still mainly one of partner owners. So in primary care there is quite a lot of doctor ownership – if not other employee ownership.

It would be very good if we could develop a much wider range of different organisations through which we could provide NHS care. And if these were employee owned organisational forasmuch the better.

Second the issue of employee ownership (and the linked issued of engagement) is vital to the NHS since at a time of need for greater productivity it might allow us to find sources of value creation, which would not otherwise be explored.

The paradox for the NHS is that most staff report very high job satisfaction. Their jobs are fulfilling and provide them with experience that are the outcomes of their work that most other jobs do not. But most feel that the organisations that they work for do not involve them in running them. Only one quarter to one third of all NHS employees feel that their senior managers encourage them to become involved in the development of the whole organisation. 

Normally, if people feel involved in their work they do so through their organisation, but for the NHS people feel involved in their work despite their organisation.

One of the ideas behind employee ownership is that owners of an organisation, through that ownership, feel a much stronger relationship to it and therefore do more for it.  If employees own an organisation, the argument goes, then they are much more likely to give more work and therefore more value to it.

Some of the evidence from other industries showed that on issues such as staff sickness, less time was taken off sick by employee owners than by those employees in the organisation that was previously owned by others. This may seem a small thing but if sickness is running at 15% in an organisation and the sickness rate drops to 5% then this almost certainly leads to around a 10% increase in productivity – an improvement of some size.

Alongside this there was evidence that when employees ‘took over’ there was a once and for all increase in productivity of about 5%, but that this did not mean there was a 5% increase next year or the year after.

At the moment, despite their alienation from the organisations that they work for many staff in the NHS provide more value than they are directly paid. They do this for the patients and for their own job satisfaction and not for their organisation. So any way in which they would increase value for the organisation will be an important step forward.

So employee ownership is an important issue for the NHA.

However, for me, one of the big problems for this discussion derives from the title of this post. The idea behind employee ownership is to get employees to think and act like owners.

In the private sector this is a clear issue. Owners – usually shareholders- act like the owners because they drive the organisation to create as much value as they can for them. If an organisation fails to do this, then the shareholders move their money to another organisation.

When employees take over an organisation they can use their knowledge and labour to add even more value and – the theory goes – can in some cases out perform traditional owners.

The big problem that I have with NHS secondary care organisations is actually no one really acts as if they own the organisation. In most hospitals the board does not think and act as owners of the trust. At the very best they manage it. In Foundation Trusts they do in fact own the trust, but act as if they manage it. Very few FT decisions are taken by Boards as if they own the trust.

Boards and CEOs can recognise the idea of stewardship but not of ownership.

This means we are in danger of asking employees to do something through employee ownership – to think and act as owners do- that at the moment no one does.

This has important implications for moving towards employee ownership in the NHS. In the private sector its clear what this means. Replacing one set of people who use the ownership of the organisation to drive maximum value for themselves with another group of people employees who will use the ownership of the organisation to drive value for themselves.

One would hope that there are different kinds of value involved but the job of both boards is to think hard about how they can use the ownership of the entire organisation to create maximum value.

This transfer of ownership hopefully leads to different outcomes but the task – using ownership to create maximum value – is the same.

I think most NHS trusts, under their current ownership are nowhere near maximising the value that they create. So the transfer is asking two things of employers.

First let’s start by, perhaps for the first time, using ownership to maximise the value that can be created from the organization; and second let’s do that from the point of view of the employees.

This combination is a big ask. But at a time when the maximisation of value will be vital, it’s an important one.

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