WESTMINSTER INTERNATIONAL COLLEGE

Assignment: Managing Human Capital

(Requirement for the module : 201405-MBAE1-MHC-Managing Human Capital)

By : Vicknesh Krishnan

The Pagan Medical Centre has seen marked progress in growth and success for the past 8 years of its establishment and it doesn’t show any signs of slowing down. Started off as a small partnership between 3 doctors with just 5 nurses being hired, this centre has eventually grown to house 200 employees.

The Director of this centre is the senior most doctor/founder among the three who initiated this partnership. This reflected a very centralized organizational structure. Centralization is the degree to which decision - making authority is concentrated at the top of the organizational hierarchy (Fry & Slocum, 1984). This role is now being looked into an elected basis as they a have board of governance in place as the centre expanded.

Housing 150 permanent staff and 50 temporary personnel, this company is still very hierarchical in its structure. Hence it is very rule driven, stable and resistant to change. Much of the work behaviour is regulated and kept within organizational guidelines and standards. This spelled out a very mechanistic structure and it saw a very high turnover in the last 4 years. The brain drain was among the senior doctors and nurses, leaving this centre with a diminished degree of quality in terms of management and health services delivery.

From the data acquired via surveys done among the staffs showed that there is a high level of dissatisfaction and demotivation. Additionally, the customer service feedbacks showed that clients exposed declining trends in satisfaction and trust levels. Pagan Medical Centre needs to restructure its human resource practices in order to compete more effectively in the global marketplace. Thus a consultant was hired to review the current practices, to analyse the strengths and weaknesses and to recommend an improved structure and set of HR practices.

Based on the consultant’s first glance, the HRM model practised in this centre is the Hard HRM. The Hard HRM practice emphasises the instrumentalisation of labour to meet business objectives and views the needs and interests of the organisation and individuals to be similar as one. (Storey, 1989). Hard HRM is often exploits practices such as intensive working, low pay, low levels of job security and, subsequently, low levels of employee commitment.

The consultant noticed that there is a gap issue between the physicians own hierarchies of professional status and managerial hierarchies of formal authorities (Mintzberg, 2012). Furthermore, performance issues i.e the imbalance of intrinsic needs among the staffs was noted to be a demotivating factor (links to Maslow’s Hierarchy of Needs) for performance and retainment in this centre. Looking at this current situation, the ongoing practice of Hard HRM with a hierarchical structure stuns the growth and progress of this centre. From the data gathered from the staff survey, it was found that the employees felt that they had very limited job scope with no options of growth, the job was very task oriented with minimal self-empowerment, rapid basic training which the staff felt was inadequate to be proficient and hence stunting their skills sets and a hierarchical structure brings about forced authority among staffs and also leads to coercion which suppresses the internal commitment to the job and tends to produce substandard service delivery. These would reflect badly on the quality and standards of service levels in this centre.

Thus, the consultant recommends a “softer” approach in dealing with issues of HRM while maintaining best practices design. With a softer HRM model approach, HR will be viewed as one of the key assets of this centre which would provide more room for staff’s personal growth and to mould the environment holistically to develop motivation and satisfaction across the board.

According to Pfeffer, 1998, the best practice model is based on universalism, i.e. a set of practices aimed high commitment or high performance will benefit all organizations regardless of context. Hence, this approach will be integrated into the SOFT HR model to improve the current structure. The consultant sourced different standards which will support this restructuring and identified ISO 9001:2008 to be the best standard in this scenario. It highlights a systems and process approach to improve the organization performance with specific outcome like (a) meet customer’s quality requirement (b) meet applicable regulatory requirements and (c) achieve continuous improvement in its performance. All of these aim at preventing unsatisfactory performance and non-conformances.

It can be said that the last decade in healthcare sectors were dominated by a number of factors which are increasing regulation, shrinking drug portfolios, dwindling pipelines, ageing populations, globalisation, advancing technology, spiralling costs and a worldwide need to increase access to healthcare services. Subsequently, the human capital requirements in this sector have become complex with market forces that are accelerating the pace of change.

Pagan Medical Centre has realised that their current recruitment practice is not feasible to sustain the quality and efficiency of hires to match the standards of the growing healthcare market. The consultant, thus, has identified several key weaknesses in the current setting on this centre, namely:

Hiring of unlicensed personnel – based on the staff survey done, it was seen that nurses felt threatened as their job security was at risk. This made them demoralized as they felt unappreciated and this led to a decrease in their productivity and their commitment to their job and to the centre itself.

Lack of internal promotions – it was a trend that when a staff leaves, the management hired a new hire from the external environment (some of them were even fresh graduates) instead of looking into the internal resource of pool. (experienced employed staff). Hence the current staff felt demotivated as they were overlooked for the available promotions and some left to seek better opportunities where they will be appreciated.

“Decaying” interview process – the current process has been rigid and traditional where the panel of interviewers were mainly comprised of doctors. This posed a limited and narrow scope of understanding the requirements of non-medical job scopes. Thus, hiring brought in wrong fits that caused disharmony to the work environment in the centre. Performance issue with a significant proportion of selected candidates during or immediately after the probation period also prevailed.

A healthy labour environment is characterized by reciprocal respect and collaboration of various branches of workers and recognition. (Luise, B. 1992) Hereby, the consultant looked at the job analysis as a crucial point when it comes to recruitment as it will give a thorough understanding of the position, essential functions of the job, scope of tasks and duties performed by the job and the knowledge and skills needed to perform this job well. It leaves no space for hiring unlicensed personnel.

Substitution of cheaper unskilled hires for more “costly” licensed personnel was apparent in this centre’s approach in recruitment as the management felt this would bring down the cost but the consultant proved it otherwise. Decrease in nurse staffing is associated with increased health care costs of 40% (McCloskey, B. et al. 2005. Effects of New Zealand's health reengineering on nursing and patient outcomes. Medical Care, 43 (11): 1140-1146.). The non-medical personnel in the administrative department, customer service, and the support staffs also felt neglected as unlicensed personnel only increased higher levels of unproductive time as they have less capacity to work independently or know the subject matter in depth to have autonomy.

Employment agencies could be sourced to seek a suitable, licensed and skilled hire. This would save time for the centre’s management in short-listing a huge pool of candidates that show interest to a position being offered. Via these agencies, the management can also source mix-skilled hires (multi-skilled support workers, vocationally trained nurse aids, etc.) to complement various existing positions to increase efficiency and standards.

This centre saw a high turnover for the last 4 years where yearly, the exits were between 10-15 people and entries were 9-12 people. The senior staffs (consultants, nurse managers, senior pharmacists and senior allied officers) were more prone to leave the centre after having served here for a period of time.

The consultant realised that the internal personnel were ignored as the attention was not paid to look into their growth opportunities and incentivise them for their services for the years served. Promotion from within would be of added advantage as the current employee would know the corporate culture and thus there will be a speed up in work and his/her role. Cost of training and educating a new hire is also contained this way. This will also save brain drain of experienced staffs who can handle higher or more responsible positions. Motivation of current employees will be kept alive and a progressive growth in productivity will be seen.

Interviews for recruitment in this centre was based on randomly selected questions from the internet, or from senior management and it was conducted in an unstructured traditional manner using 4 to 5 medical personnel /doctors across all job descriptions with ad hoc use of reference checking. This practice lacked depth and data to support the decision making process and the interviewers were unable to provide sound reasons to higher management and the interviewees. This inefficiency can be revised with interviews that will be conducted with the hiring authority and subject matter experts (SME) in order to increase the understanding of the role's responsibilities and thus making it easier to collaborate with the hiring manager. This will then put in place a proper team for the Panel Interview approach (comprising personnel from the medical, management, human resource and support divisions) and observing a single candidate will be much more thorough and on a broader scope of affinity. The consultant felt that Situational Interview and Behavioural Description Interview should be incorporated here.

Psychometric assessment should also be introduced as this centre aims for a pool of experienced staff to maintain the corporate culture’s harmony and in turn enhance the image of this centre with their service delivery. The consultant felt that the recruitment process has to be mindful of a good fit between the needs of the centre/objective of the health service industry and also the culture. "Fit" here refers more to the "matching of expectations and needs of the individual with the values, climate and goals of the organization" (Stephen Bach, 2005).

A source of competitive advantage is the ability of an organization to learn faster than the others. Here, this centre has to realise that this learning occurs in the minds of the individuals (staffs) and groups. Drucker (1993) emphasized that the value resides inside the heads of the employees and less within the capital assets of the organization. Unlike capital assets which depreciate over time, the value of individuals increase with time provided sufficient training is in place. Porter’s generic strategy defines how a company addresses its competitive advantage across the chosen market. This centre needs to model its HRD to Porter’s differentiated strategy. The strategy of differentiation involves offering a different product, a different delivery system, or using a different marketing approach in order to gain competitive advantage (Porter, 1985).

Based on what’s been observed by the consultant, it was suggested that on the aspect of Human Resource Development (HRD), focus should be in developing the most conducive workforce to be in par with the ever raging healthcare industry.

The consultant gathered that the higher management seek external hires for open job positions as they felt the current employees lacked skills and affluence to be promoted. Furthermore, it was observed that the hierarchical structure had closed doors for open communication with the current staff and thus information relay was disrupted.

Managers should be trained in performance coaching and they should refrain from the assumption that employees choose to underperform and that their bad attitudes are unchangeable. They should also make performance management process less controlling and more of an employee-driven, adult-to-adult partnership and result-focused management tool. Terminating non-performers when the best efforts to coach or to reassign fails, has to be relooked as here, the coaching aspect might need a revision.

Medical personnel such as doctors, felt that much of their time was taken up with administrative work rather than looking into patient care. In this scenario, nurse – aids or medical support staff can be trained to take up some administrative work in order to help the doctors focus more on the patients while keeping the system running well.

Nurses should go through job rotation in order for them to familiarise themselves on a wider scope of work activities that is going on in this centre. This in turn will empower the nurses to be able to identify their personal interest in a specific field and this interest can to be further developed, and coached with in house training or external modules. Confidence will be nurtured among them and standards of healthcare delivery will improve on a marked scale.

High turnover noticed in this centre has to be addressed by looking into factors that drive the staffs to leave. Besides promotion, staffs complained about lack of professional continuous educational programmes to keep them abreast with the growing environment. Medical personnel should be sent for Continuous Medical Education (CME) such as conferences, forums, workshops, etc., in order to enhance their skill set which in turn will add value to the company’s intellectual property and service delivery. Medical support personnel skill sets should be further developed via means of certified training. For e.g., a radiographer can be sent for certification in sonography / fluoroscopy, neuro-imaging, etc., hence developing a multi-skilled individuals. On the other hand, non- medical personnel should be equipped with the right tools and trainings. Soft skills training and technical training on specific software (e.g., CRM, HOSxP, ZEPRS, etc.) is essential to arm these personnel to be more confident with their work and enrich their potentials, in turn leading to job satisfaction.

Development should be on a holistic approach across all levels. As mentioned earlier, due to the hierarchical structure of this centre, communication across the board has been strained. In order to breach this, the consultant felt that a companywide development program should be implemented. The consultant suggests that a program that involves all members of staffs to be randomly assigned into groups and these groups will undergo various teambuilding development activities yearly. This will strengthen the bonding between staffs respective of their positions and allow exchange of knowledge to create a stronger team with a more open culture.

Training and development should be seen as an investment and not as an additional cost of burden to the centre.

One of the key components in effective management revolves around harnessing the motivation of the employees in order to meet the organisational goals. Motivation of an individual has to be focused around the willingness to work/perform, capacity for performance and the organisational support in making this efficient.

The consultant decided to look into the theories below for this centre:

Maslow (1943) felt that man’s needs are arranged in a series of levels based on its importance. As soon as needs on lower levels are met, those at the higher levels will gain satisfaction. Maslow identified higher order needs (self-actualisation and esteem) and lower order needs (social, safety and physiological requirements).

The diagram in Annex 1 illustrates the theory with its components.

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The cultural framework of an organization should reflect the fact that the employees' physiological and security needs are paramount; therefore, when such needs became culturally focused, performance will be improved tremendously in the organization (Maslow, 1954.

The consultant identified that the areas of safety needs (i.e. assurance of job security), social needs (to create a sense of community via team building or social events), self-esteem needs (to recognise the achievements to make employees feel appreciated and offer job titles/ promotions to convey their importance) and self-actualization needs (i.e. providing the employees a challenge or opportunity to reach their full career potential) were not met in the current management structure.

Clayton Alderfer redefined Maslow's theory in order to bring the aspect of motivation to synchronise with empirical research and came up with the ERG theory in which three categories of human needs were distinguished, namely:

• existence needs

• relatedness needs

• growth needs

According to Alderfer, the needs aren't in any order and any desire to fulfil a need can be activated at any point in time. (Riggio, R. E., 2003)

Based on the survey done, the consultant gathered that the employees are facing this the frustration-regression principle which is spelled out in the ERG theory. As discussed earlier, the newly suggested training and development initiatives would help break this dilemma and bring out the inner most ability and tap the hidden potentials in the person.

In this context, the management of this medical centre has to recognize their employees' multiple simultaneous needs. If growth opportunities are not provided to employees (promotions, training, continuous education opportunities), then they may regress to relatedness needs, and socialize more with co-workers.

On the other hand, a dive into goal setting theory by Dr.Edwin Locke is a perspective worth considering. Goal setting involves the conscious process of establishing levels of performance in order to obtain desirable outcomes. When behaviours that will accomplish a goal is paid attention to, those (behaviours) that will deter positive achievements of a goal will be minimised.

The consultant recommends the implementation of Key Performance Indicators (KPIs) which was the missing link to track the progress of this centre and also the performance of staffs. An open two way forum between the staffs and the higher management will lay out discussions on capabilities and limitations from both sides and how this can be overcome with a set of goals that will contribute to the staffs needs and wants and also meet the company’s objectives. In order to motivate the staffs’ commitment to the performance goals, the use of extrinsic rewards such as bonuses and encouragement of intrinsic motivation through providing employees with feedback about goal attainment is needed. (Sawyer, Latham, Pritchard & Bennet, 1999).

In conclusion, the consultant feels that a blend between safety, belonging and esteem aspects from Maslows’, with Alderfers’ training and development needs with incorporation of setting goals by Locke is what seems to be a holistic approach to address the issues faced by the Pagan Medical Centre. With focus on training and development, and goals having been set, the employees will persevere to the climb towards self-actualization in a more pronounced manner as they will be equipped with skills and knowledge.

Managing change is about handling the complexity of the process. It is never a choice between technological or people-oriented solutions but a combination of all. (Davies C, Finlay L, Bullman A. Changing Practice in health and social care. The Open University: SAGE Publication, 2000.)

Since this centre has always been on a hierarchical platform, hence the management is less flexible, less submissive to change and less likely to empower staff. According to Al-Abri (2007),”leaders have to learn how to manage change, rather than change manages them in order to move forward with success.”

As this centre’s management is very rank oriented, the mind sets are deemed rigid thus resisting change as a revamp is looked upon as a taboo. Bringing about change requires to challenge the precedent, and persevere against the habits and norms of established behaviours. Those in power are very accustomed to their current positions and bringing in a new culture to revitalise the structure makes them feel threatened with fear and anxiety of change. This puts a barrier for betterment as the higher management are the change agents.

Based on earlier suggestions of having a mixed skilled team to handle various situations in this centre, for e.g. the interview process, will challenge the “control” aspect of the medical professionals group as their vote in the decision making process will be shared by the non-medical professionals and this will be an ego issue that has to be dissolved.

A change in culture across the board might seem unrealistic to be adhered as new values will be antagonistic to the old ones. For e.g. Doctors enveloped in old school practises only believe that their role revolves around patients and does not include managerial and marketing responsibilities. This threatens the doctors’ stability and continuity of control that they have set and thus will be a setback for change.

As per previous recommendation on cross cultural bonds, engaging staffs from different levels in ranking to work together as a team for group activities might bring about discomfort or even ego based non-participation or non-cooperation as higher rank staffs would detest the need to mingle with those from the lower rank, whereas, the lower rank staff would feel intimidated to get comfortable around those from the higher ranks.

It is important to consider how people will personally be affected by the change process, as “change requires that people do something they have not done before” (Galvin 2003). Effective change in this organization has to be characterized by unfreezing status quo, introducing new ones and refreezing the newly implemented ones to make it permanent to move forward (Lewin, K. 1951).Rational persuasion and shared power approach should be bundled with Lewin’s theory.

These efforts in changes has to be evaluated with the force field analysis as existing driving and restraining forces has to be shifted out of equilibrium in order for changes to happen. (Wood, Zeffane, Fromholtz, & Fitzgerald, 2006).

This centre’s management has to be prepared to recognize the need for change and disconfirm existing behaviours. Current issues within this centre (high turn-overs, employee dissatisfactions, low motivations and lack of multi-skilled personnel) should serve as a catalyst to ignite the change process. The key to this unfreezing catalyst is communication (Lewin, K. 1951). Thus, the surveys done by the consultant will allow the higher management to get an insight of the existing gaps within the current state and the desired changes can be then moulded into specific outcomes that’s expected out of the management team and also from the employees in order to meet the organizations goals. Relevant staff from the management and also the ground staff/employees should be engaged together to participate in the process leading towards examining the status quo and working around it to bring about necessary changes. The open door policy has to be in place here in order to build cohesiveness across all groups of employees. If communication breaks down, implementation plans miss their mark, and results fall short (Strebel, 1996).

With adequate communication and open discussions, forces within the individual and those within the system will be clearly identified and will enable higher level management to work around it in order to reduce resistance to change. Hereby, the readiness of the higher management for continuous negotiation should be in place to maintain a healthy and less resistive situations. As change agents, logical, empirical and rational reasoning should be conveyed to all staffs to motivate long lasting changes. Strong emphasis has to be given into the involvement of all parties collectively in the decisions identifying the needs for change and the desired change in direction.

Once the people, structure and the elements of a new strategy are on the same page, thus these can then be incorporated into the refreezing phase to reinforce desired outcomes for the organization and the staffs as a whole. A process that supports and maintains the changes has to be in place i.e. for eg. new employee performance appraisal systems, rewards to those who adhere to the organizations new values, continuous training for the personnel, etc. (Lewin, K. 1951).

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