The viability of the NHS is a paramount concern and one of the key issues we currently face is the lack of available workforce to deliver the care, at a high quality standard, to the population. Organisational form is one key element to consider in how we utilise our resources best, however it is not the only answer and ensuring we continue to examine the clinical models is crucial. Form follows function and so only once the clinical and requisite support models have been identified should the optimal organisational form be considered.
As the Head of the Dalton Review it was clear to me that organisation form is best considered as a delivery vehicle to execute the organisation’s strategy. In the Review Sir David Dalton asked leaders to become “‘strategic architects’: using their social entrepreneurial spirit to develop innovative solutions to their challenges and to codify and spread their success, so that the best standards of care are available, reliably, to every locality in the country.”
Although the Dalton Review examined the benefits of different organisational form, it did not champion one model over another and was clear that it was down to individual organisations to consider their own local circumstances. Organisational design is very important to get right as it is very easy to destroy the value in an organisation by executing a poor merger or acquisition or trying to force clinical services into an organisational form that is not the best fit.
In order to support leaders, the Dalton Review developed a series of practical checklists for Trust Boards to ask themselves to determine the right organisational form(s) to consider go to gov.uk to access). The organisational form should be able to support the organisation to deliver against three key areas:
- Strategic ambition
- Patient and clinical benefit
- Financial benefit
For those NHS leaders actively contemplating the future of their organisation, here are some key considerations when thinking about whether or not organisational form is the right answer:
More than structure – structure is powerful but a blunt instrument for influencing relationships and can often not drive the value creation that organisations expect to achieve through changes in organisational structure or form. Remember 70% of mergers fail. It usually only works when supported by changes in processes, people, rewards and measures. This is important to consider the operating model and clinical model.
Relationships – effective organisation is about good people working well together: relationships. Good organisational design work is about creating the context for good working relationships.
Informal organisation – the real organisation is the informal organisation. In healthcare this is particularly powerful. How do your clinicians really get things done? What is the cultural narrative of the organisation and what is important to the staff that work there? What’s going to enhance this and retain and recruit your workforce? Organisational design should aim to improve/ enhance the informal organisation by making changes to the formal organisation.
Power – Relationships are influenced by power differences. Understanding power dynamics and how to shape them is essential to organisational design.
People – Organisations should be designed for the people who will work in them – however not just the heroic superman or superwoman leader and not only around the incumbents (unless they are fixed). Thinking about the people available that could be attracted to work in the organisation and how the design could enhance the opportunity of recruiting them.
based upon the material from Advanced Organisational Design; Ashridge Business School: adapted from Andrew Campbell and Michael Goold, Designing Effective Organisations
So, why do 70% of mergers and acquisitions fail? One of the reasons is that not enough time and thought is applied to the requisite organisational form to deliver the strategic ambition. Many leaders forget or even try to disregard the fact that organisations are made up of people and it is often the informal working practices and culture that creates the value in organisations. Underestimating the power that the culture has on the value creation of the organisation is a mistake that is made over and over again.
Common mistakes leaders make are:
- Creation of a new entity or organisational structure – the factors that create the value in both organisations is often destroyed in this process. Understanding how things get done (and often this is not how it appears things get done by looking at the hierarchy), and working through how best to preserve this, is key to maintaining or enhancing the value in the organisations involved in the M&A
- There is no such thing as the perfect organisational form – there is the optimal form, at the time, which will help to deliver the strategic ambition of the organisation. Understanding the limitations of the organisational forms, particularly the generic elements such as matrix structure or having stand-alone strategic business unit etc, will help the designers to make design choices that minimise the impact of these limitations and optimise the structural design
- Leaders can get wedded to organisational forms that they have designed – it is easy to come up with an organisational form that at first glance appears to be perfect, however digging a bit deeper would reveal that it could have flaws. Often, leaders do not want to dig further as doing something is often more enticing than doing nothing. This can lead to the wrong design; destruction of value and years of trying to manage the unintended consequences of poorly thought through organisational design, often playing out as cultural issues and dysfunction.
Overall, the new flexibilities afforded to the provider sector, to examine their organisational form are a fantastic opportunity, however there is a risk that the need to be seen to be ‘doing’ very quickly could leave some Boards and senior leaders across health and social care to make quick decisions on the right organisational form without thinking through all of the consequences.
We must not forget that the NHS is made up of the 1.4million people that deliver the care to our population. It is not a machine that you can get a toolkit out, dismantle and then try and rebuild more efficiently; it is a complex system and every organisation has its own unique culture.
The design of the organisational form is almost the easy bit and so easy to get wrong. Leaders need to give careful consideration to the organisational development programme that will need to be in place to underpin the change. Going through the motions of the organisational change policy; putting people into new roles and changing protocols is not enough to create a new organisation and culture. In fact, it is a recipe for disaster, despite this, it is a well-trodden path for the NHS and one we might need to think about diverging from.
Leaders need to give careful consideration to their organisational culture and their staff and think about how best to create rather than destroy value through changes to organisational form. Many leaders of financially challenged Trusts face the difficult balance of resisting being seduced by the promise of a slice of the £200m transformation fund whilst being under pressure to change organisational form quickly to ensure viability. Engaging with their staff to truly understand the organisational culture and how to get the most out of the ways of working will be vital to the success of any change.
Getting this right at scale has the exciting potential to create a viable; sustainable and more effective NHS for future generations.
About the author
Sarah Morgan is the former Head of the Dalton Review for the Department of Health and is currently the Director of Organisational Development at Guy’s and St Thomas’ NHS Foundation Trust
Materials quoted from Advanced Organisational Design course at Ashridge Business School; Led by Andrew Campbell access the link for more details https://www.ashridge.org.uk/executive-organisation-development/open-programmes/advanced-organisation-design/
 Research undertaken for the Dalton Review in the Literature Review access at https://www.gov.uk/government/publications/dalton-review-options-for-providers-of-nhs-care)