Why Culture Comes First Not Last – Banking Reform and the NHS

Banking reform is at the centre of political debate currently. It strikes me that there are key issues thrown up by the debates about what should happen with the banks that can cast a useful light on what we should be thinking about – urgently – in the creation of the new commissioning arrangements for health care. As we move rapidly onwards with creating the commissioning and delivery structures for CCGs here are some thoughts stimulated by the discussion about what we need from banking reform.

There has been a lot of discussion about the reform of banking and what should be the way forward. Repeatedly statements from Government suggest a three-phased approach, tackling reforms to regulation, structure and finally, culture. Different politicians and experts play different tunes on this troika of instruments but the basic mantra is much the same across policy makers and the commentariat. Solid things first – structures and rules, less tangible things such as culture can follow later.

However, anyone with the slightest understanding of leadership, organisational development and human behaviour will know at once that there is something wrong with this formulation. It’s simply the wrong way round. Whilst it is perhaps natural to place culture, the soft stuff, at the end of the reform process this is a profound mistake. It is the exact opposite of what is needed.

We know that organisational culture (or more simply what people do and believe they are doing) emerges from the interaction of structures, purpose, rewards, sanctions and rules with the sense making activities of people in the system – bankers, managers and customers (or clinicians, staff and patients).  It is the material environment that shapes culture and its people that derive meaning from their activities. Culture grows out of the practical and physical realties of work and the routines of work organisations but it is nurtured and shaped by the actions of individuals, teams and senior leaders.

But, somewhat paradoxically, whilst culture is emergent, it doesn’t mean that it can be left to chance or to the eventual distillation of quixotic actions and behaviours of actors into something meaningful. It follows that the way we build our institutions and processes will have a profound influence on how staff and professionals behave and what they think. So, if the objective is to create a precise culture – particularly one that serves the bank’s customers (or in the NHS’ case, the patient and citizens) better, the way that regulation, structures, governance, rewards and processes are designed has to be congruent with the cultural objective.  Trying to create a positive culture in a negative system is bound to be an uphill struggle. Key actors will face failure or, perhaps even worse, absorption and complicity within an irretrievably flawed system. Leaders will find themselves continually battling with people and organisations that never seem to improve.

At the sharp end, from a bank customers point of view, it’s the culture of the organisation or the team that matters most since it is this that they experience first and most intimately. The hidden machinery of regulation, process and delivery is of little interest to the customer as it is can only be experienced by its outward manifestation  – often the attitude, values and behaviour of staff.

Leadership can go a long way to shaping culture and we know that excellent leadership can give meaning, purpose and clarity to the way an organisation functions. However, the underlying structural and productive reality of organisations cannot be negated no matter how brilliant the ability and vision of leaders.

To give an obvious example an aggressive bank bonus scheme based on competition in the market with no voice for customers or wider interests is unlikely to be ameliorated by attempts to create a different culture no matter how altruistic and collaborative the leadership style. In fact it is absurd to even consider that leaders in such an environment would consider the creation of such a culture would be desirable or possible. The leadership culture is more likely to follow the material and process underpinnings of the industry itself.

So what can we say about culture in the reformed NHS. Should we, like politicians want to do with the banks, get on with the important business of reform and structural improvement and leave the cultural issues for later when the smoke has cleared and we know what we are doing?

For my part I think there is a fleeting opportunity before us to consider the kind of culture we wish to create in our new commissioning systems, structures and on our emerging boards. We need to consider what kind of impact we intend across the delivery of services locally. It is difficult to think about such soft issues when there are so many uncertainties and pressing organisational issues to resolve in order that the system is capable of functioning at all.  However we should resist the temptation of sorting out the practical and immediate at the expense of the long term and fundamental.  A system that places professionals at the heart of its rationing and prioritisation will struggle to ensure that its emergent culture is truly patient or citizen led unless this is built into practice and structures from the start.

There are plenty of great patient led examples of service design and function which can used as a way of thinking through how to approach the issues locally or can be used as a way of developing local initiatives. (See for instance http://www.richmondgroupofcharities.org.uk/RichmondGroup2010.pdf)

So, better to be clear about the vision and culture that we wish to create and design structures, processes, regulation and rewards to fit – from the very beginning. If patients and communities are to get a better deal from the new system we need a vision of how the culture of the new world will be shaped and replicated. Patient’s perspective and voice should be at the heart of this evolution even when we are apparently shaping the most internal, mundane and byzantine details of the new world. For it is in these seemingly unimportant corners of the new machine that culture will be formed.


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