Human resource management in the National Health Service

In July 2002, the UK's National Health Service (NHS) launched an 'HR in the NHS Plan'. The plan sets out the significant contribution that human resource management is expected to make to patient care over the next five years. This feature discusses key elements of the plan in the context of increased health spending, arguments that good human resource management is a crucial element in improving organisational performance, and hospital 'league tables'.

In 2000, the government launched its 10-year strategy for the National Health Service (NHS) - the NHS Plan. This plan was part of the modernisation agenda for the public services (UK0111107F) and set out an ambitious programme of increasing staff numbers (for example, 20,000 more nurses by 2004) and a major redesign of jobs. The March 2002 national budget increased spending on the NHS by 6.1% in real terms over the next four years and the government's July 2002 Comprehensive Spending Review indicated that GBP 56,653 million had been allocated to health spending for 2003-4 (a 27.3% cash increase over three years). The government believes that this funding will allow managers to plan with confidence for the medium term, noting also that the NHS is now 'the fastest growing healthcare system of any major European country'. However, the increased resources for healthcare (and other public services) are based on a 'something for something' principle, ie the new investment is provided on the understanding that the workforce will cooperate fully with all reforms of the service and that better pay will relate to increased productivity and flexibility.

Against this background, in July 2002, the NHS launched its HR in the NHS Plan. Subtitled 'more staff working differently', the plan sets out the significant contribution that human resource management is expected to make to patient care over the next five years.

Key points of the plan

The HR in the NHS Plan builds on the NHS Plan and indicates how human resource (HR) management is to be at the forefront of delivering a modernised service 'with faster, more accessible services based on patient needs'. Justification for identifying HR as a key element in the modernisation agenda is derived from:

• the growing body of research that seeks to link HR to performance;

• evidence from US 'magnet hospitals' that progressive HR practices lead to better patient care; and

• evidence from the UK that links appraisal and small-team working with a reduction in post-operative death rates.

The HR strategy is also introduced in the context of a performance management system whereby healthcare organisations ranked as 'three star' receive more resources and autonomy. Organisations demonstrating the poorest levels of performance are awarded no stars and could have 'franchised management' if they do not improve within 12 months. In effect, this means that the Secretary of State for Health will appoint managers to the 'failing' organisation from a register of private firms, voluntary organisations, NHS management teams and other public sector managers. Ratings released in July 2002 relating to the 304 healthcare organisations ('trusts') in England, indicate that 68 were ranked as 'three star' and 10 received 'no rating'.

The HR in the NHS Plan consists of four 'pillars' that are intended to attract more workers to the NHS and facilitate different ways of working:

1. making the NHS a model employer;

2. providing a model career through the concept of the 'skills escalator';

3. improving staff morale; and

4. building people management skills.

It is the second pillar that is linked most closely to different ways of working. The 'skills escalator' is meant to encourage lifelong learning so that staff can renew and extend their skills and move up the escalator whilst, at the same time, roles and workload are being passed down the escalator 'giving greater job satisfaction and generating efficiency gains'.

Pay modernisation is a core component of this pillar. A new pay system, known as Agenda for Change is currently under negotiation, which is intended to be a simpler pay system based on the principle of equal pay for work of equal value (UK0103120F). The 11 'Whitley Councils' currently responsible for determining the terms and conditions of different groups of NHS staff will be replaced with a small number of common pay bands within which jobs will be matched using job evaluation to ensure fair pay. This system will harmonise terms and conditions across the service and is intended to pay staff for what they do rather than for occupational status. It is seen as a key element in motivating staff to work differently. The Agenda for Change was launched in February 1999 and negotiations were due to conclude in late 2001 but have been significantly delayed. In July 2002, the Royal College of Nursing (representing a large proportion of NHS nurses) threatened to cease its involvement in the pay modernisation negotiations if delays continued.

Trade union reaction to the plan

UNISON, which represents 400,000 workers in the NHS, has welcomed the HR in the NHS Plan but raises three concerns:

• there are capacity problems in terms of the ability of management and trade unions at local level to implement Agenda for Change, and trade union facilities need to be increased to address these;

• the current rhetoric about staff involvement and 'social partnership' working needs to be translated into real changes in behaviour and practice at local level; and

• the contracting out of NHS staff into private sector organisations through private finance initiatives (PFIs) (UK0111107F) remains a significant problem for staff in the NHS, and contracted out staff should be brought back into the NHS.

UNISON also notes that it is fundamentally opposed to any suggestion that the private sector should be involved in managing 'failing' healthcare trusts.

Commentary

The HR in the NHS Plan highlights several issues. First, it underlines the growing importance attached to human resource management. This has several elements. In the wider management community there is a growing acceptance of the argument that HR can make a positive difference to performance. More specifically, NHS HR managers are frequently being encouraged to demonstrate 'HR with attitude'- a phrase coined by the American academic, David Ulrich - and become an integral part of decision-making in the NHS. However, with the increased recognition and status of HR in the NHS comes an onerous responsibility - to deliver the plan, thereby raising the public image of the NHS as a provider of good healthcare.

The second set of issues raised by the plan relates to the pay modernisation agenda. The protracted nature of bargaining over the Agenda for Change highlights the continued importance of collective bargaining within the health service. The strength of the unions involved in the negotiations - undoubtedly strengthened by undercapacity in the NHS - has enabled them to develop the new system jointly as opposed to having it imposed on them. Imposition would be a tempting solution for the government given that all parties agree that pay modernisation is key to the future of the NHS.

Third, once concluded, Agenda for Change should have positive implications for closing the gender pay gap in the NHS. A particular issue for low-paid women in the NHS is their employment as non-registered nursing staff. A study by Carole Thornley (Neglected nurses, hidden work, UNISON, 1998) showed that the majority of nursing auxiliaries perform a variety of advanced tasks, including substitution for registered staff, with little or no supervision. Their work is not well rewarded, with over a quarter (at the time of the study) earning less than half the male median earnings. A good future indicator of the success of the 'skills escalator' and Agenda for Change will be the raising of these wages to reflect the work that these women do, rather than their occupational status. (Anne McBride, Manchester School of Management)