organisational theory

Published: 15/01/2004, Volume II4, No. 5888 Page 28 29 30

Why do some NHS organisations seem to collapse so suddenly and spectacularly - and what can be done to save them? In the first of a series, 'turnaround'chief executive Jan Filochowski highlights the key issues

From time to time, every NHS organisation faces problems it cannot immediately resolve. This does not mean the organisation is failing - sometimes soundly functioning organisations will miss an occasional target. But there are organisations which cannot cope with difficulties and have lost the ability to do so. There are a number of key signs for this - and one overarching one.

An organisation's performance and the perception of its performance should be reasonably close.When the two diverge, it is a strong indication that either the organisation is already failing or that this divergence will become a cause of the failure.When an organisation begins to recover, a perception of improving performance that lags behind the reality is also dangerous, and a brake on improvement.

In the beginning What is it that starts to push an organisation down the slippery slope? In my experience, it is some or all of the following:

The leadership of the organisation addresses symptoms not causes, and so the problems continue to get worse.

Top team changes cause essential skills to be lost, without the loss being recognised.

Managerial tactics are not changed even though they have ceased to work following a change in task.

The leadership of the organisation recognises it has a problem it cannot fix, but because it fears blame it seeks to underplay or conceal it.

The leadership pursues one objective at the expense of all others - and it is the wrong one. Securing a new facility at all costs is the most common example of this in the NHS.

The leadership pursues a wide range of issues and fails to prioritise between any of them.

Those responsible for the oversight of the organisation's management - the board, external monitors such as the strategic health authority or the auditors - are not sufficiently vigilant, are party to the error, or are actively misled.

The key defining point is the lack of recognition or acknowledgement. This is when an organisation with remediable problems (phase 1) starts to fail (phase 2). A six-phase trajectory tracks the divergence in actual and perceived performance (see graph above).

Decline and fall In phase 2, the organisation is on a very dangerous, declining trajectory. Those who could highlight the problem choose not to do so. Those who ought to be becoming aware of it, are not. In the meantime, the causes are magnifying the problem.

This phase can go on for some months, but it is virtually inevitable that it will come to an end for one of the following reasons:

Those responsible for the problems, but who have actually given up on them, will flee.

Someone will blow the whistle on the problem, causing those responsible to be removed.

The problems will become so obvious that denial will no longer be possible, again causing removal of those responsible.

This leads to phase 3, the rudderless or freefall organisation. There is no direction in the organisation, there is no pretence of it and the organisation's corporate cohesiveness starts to fail. People retreat into their corners and do their own things. The underlying problems get worse at an alarming rate. Everyone within the organisation, and everyone outside, starts to recognise that something is drastically amiss.

This very damaging phase is typically very short. The organisation hits rock bottom quickly. The organisation is totally reactive as it has lost all sense of direction. At this point it is moving to phase 4: on the bottom with low morale.

This is when it is at maximum risk of blame and has minimum ability to defend itself. There is an overreaction: those who have missed the tell-tale signs now see tell-tale signs everywhere. The organisation, unconscious on the floor, is now blamed not just for its failures but often for many which are not its fault.

At this time, almost inevitably, people other than management - the board, the SHA or even the centre, if the failure is spectacular enough - start to push the organisation to deliver immediate outputs. This is what is known in financial circles as 'dead-cat bounce'. The organisation is effectively moribund but is being pushed by people remote from it to satisfy short-term imperatives.

Steps to recovery

What can and does improve performance is the introduction of effective new leadership. This is the prelude to moving into phase 5 - improvement - but it does take some time because response to immediate problems and analysis has to come first. If the new regime is not up to solving the problems or does not go about things in the right way, the organisation can loop round until it gets a regime that can actually tackle the situation. But a competent new regime will start to make a difference relatively quickly. Performance will, at first slowly but nonetheless steadily, improve. The organisation will cease to be as incompetent as it is perceived to be (see panel, right).

This is phase 5 and it can be a dangerous one. The position has flipped from being seen as performing better than it was to being perceived as doing worse than it now is. This acts as a significant drag factor on improvement because, once again, much effort has to go into managing perception. Those charged with monitoring the organisation are now rather wary. They were late in seeing how problematic it was and do not want to get caught a second time.

This phase need not be static, but it can go on for a long time. The organisation's successes are slowly realised, but often too little and too late. The best way out of this is a high-profile event, whether in the media or a 'live performance', which spectacularly demonstrates the improvement. Once that happens the organisation is back in the normal world: performing reasonably and seen to be performing reasonably - phase 6.

Learning lessons from failure

Having identified this pattern for failing organisations, I have come across it again and again. I have shared it with others who have said they recognise it as a theme, in healthcare and elsewhere.When I presented the ideas to a large group of ear, nose and throat surgeons, their comment was: 'This mirrors what happens when an individual's practice runs into trouble.'

If we are to do better in the NHS, first we need to recognise more readily that failure will occur. Second, we need to do more about the two most worrying phases of this process, when perception and reality are adrift from one another. The first phase - denial - is the most dangerous, and to stop people drifting into it we in the NHS need to become more 'fault tolerant'.We should encourage managers to be open about difficulties and blockages early on and help them resolve them while not immediately moving into blame.Where the resolution means bringing new hands to the job (rare), we should help and support those being relieved of the job, not just psychologically but materially.

The NHS is becoming more aware of, and better at, risk management. This is not about paper-based, box-ticking risk assessments for monitoring. It is about genuine acknowledgement of the specifics of real problems. It is also about mindsets, in which, on the one hand, managers can acknowledge and, on the other, monitors can give permission to acknowledge real problems and difficulties. If we can build this robustly into the NHS, we can reduce radically the occasions in which organisations move from serious difficulty to catastrophic freefall. The alternative is not to manage the systems and processes that do exist, but to become their servants as they mutate in response to whatever problem is out there now.

The second area of danger is the recovery phase, where recovery is not recognised or is seen as remission. The best way to help and accelerate recovery is to create a mindset among those monitoring and judging that is based on open-mindedness and trust. It should involve early recognition and reinforcement of success, driving the organisation and its new leaders into a virtuous circle of improvement.

With the right sort of contextual understanding and support, managers' actions can become less desperate, less stressed and more balanced. If they have the confidence that they will be supported through their reasonable difficulties and mistakes and their improvements will be recognised, they will sleep more easily and perform better. A key to this is recognising the improvement in the particular organisation rather than always measuring it against an absolute standard.

In this article I have tried to describe the path to failure and recovery, both as it is perceived and as it actually is. In my next article, I will argue why lack of communication is a key symptom of a failing organisation - and one of the most important to remedy. l Medway: how we used Modernisation Agency techniques before their time At Medway trust, writes Jan Filochowski, having been castigated for a terrible performance on waiting lists and waiting times, our external monitors realised the trust was now improving at a faster rate than previously thought.This was because the trust had found the root of the problem and was systematically resolving it.

How did we do it?

We got proper data on our waiting lists.We detailed the different approaches of different consultants and/or their secretaries.We mapped out the shape of waiting lists, which showed us what each selection method did.We identified a 'virtuous'booking process, which limited the number of patients left waiting until near the maximum allowed waiting time.We used this model to set our own targets on what waiting lists should look like.We then held seminars for all consultants' secretaries showing what we had found.We showed them the effects of different styles of patient selection - good, bad and random - and the different shaped waiting lists these produced (see graphs, left).We explained how they needed to change practice to achieve virtuous booking.And we looked at the effect of what they did week by week.

The shape of the waiting lists changed, and the consultants became interested, even intrigued.We then held seminars for them, and this completed the transformation.Secretaries - and at times consultants - competed to see who could make their lists virtuous and reduce them quickest.

Understanding, enthusiasm and appreciation that patients were not having to wait so long were the main feelings.

Once we had this, there was a very small number of patients in our longest waiting cohorts.This enabled us to put a programme in place to remove the top cohort of 17-18-month waiters.Once that was achieved, and the same virtuous waiting-list shape kept, we could immediately target 16-17-month waiters and eliminate them.Without realising it, we had come up with primary targeting of lists and CPaTs (clinically prioritise and treat) before the Modernisation Agency.