Published: 29/07/2004, Volume II4, No. 5916 Page 18

Jay Bevington begins a regular series looking at recent reading material on a topical subject - this week organisational failure and turnaround

Learning Through Supporting Improvement Change from challenge?

www. cgsupport. nhs. uk/ Programmes/Performance_ Development_Team. asp

Public Money and Management Special issue on public sector turnaround www. cipfa. org. uk/pmpa

Organisational Turnaround: Lessons from a study of 'failing' healthcare providers in England www. academyhealth. org/ 2004/index. htm

Our understanding of what makes trusts fail and what to do if it happens is still limited, but growing.However, a number of new resources are useful in drawing out some key lessons.

Two weeks ago, the NHS clinical governance support team's performance development team published Learning Through Supporting Improvement: change from challenge? , sharing its experiences of working with more than 60 zero-rated trusts and primary care trusts.

Through supporting the turnaround process in these organisations over two years, the team has learnt that reasons for failure can include financial mismanagement, poor operational management, inadequate leadership and lack of clinical engagement, to name but a few.However, the root cause is nearly always an inability to learn and adapt, predominantly at senior levels.

Successful turnarounds usually consisted of three broad types of interrelated activity:

replacing key people and/or restructuring the organisation;

immediate attention towards correcting major operational problems; and a radical rethink of strategic direction.

An article to be published next month in the journal Public Money and Management looks at the lessons that can be learned from private sector turnarounds.

Professor Kieran Walshe and colleagues point out that replacing the chief executive and other leaders may be necessary to provide a scapegoat - and to secure the confidence of external stakeholders.

In short, the reasons for management change in industry can be as much political and symbolic as simply due to the fact that existing managers are not up to the job. Few would argue that these factors do not also apply in the NHS.

But the jury is still out on whether this strategy is necessary and effective in all turnarounds.

The replacement of key people carries significant risks. It can mean the loss of key expertise and organisational memory, and can have a devastating impact on those affected.

The findings of Naomi Fulop and her team at the London School of Hygiene and Tropical Medicine are worth bearing in mind. In a recent talk, Organisational Turnaround:

lessons from a study of 'failing' healthcare providers in England, she shared the results of a two-year study on nine acute trusts.

Perhaps unsurprisingly, it found that success depended on managers having certain core leadership skills. But it also found that timing and stability, increased funding, and external help and support were just as important as good leadership.

Organisations that had access to all or most of these resources were most successful in their turnaround, achieving either two or three stars in 2002-03.

Fulop and colleagues recommend that where a change of leadership is necessary it is important to appoint people quickly and give them time to deliver the changes.

Prolonged periods of acting management created a hiatus in the hospitals studied, which led to systems collapsing, staff effectively 'running their own shops' and progress stagnating.

Sometimes relatively small amounts of additional funding took pressure off staff at the same time as building organisational confidence in the turnaround programme. Finally, Ms Fulop and colleagues conclude that sustainable organisational turnaround may take at least five years, so be realistic!

Next time, I will look at Ed Schein's latest book on organisational culture and leadership and a new book on the cultural characteristics necessary to deliver high performance in healthcare.

Jay Bevington works for the Department of Health's clinical governance support team; he is associate director of its board development team.