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The Leadership Gap

30 November 2015

Agenda for change

In a report by the King’s Fund it was revealed that one-third of trusts have at least one board level vacancy or an interim executive board member in place. Most of the vacancies were for finance director roles, with nine per cent of all trusts having no substantive finance director. In addition, over 12 per cent had no substantive chief operating officer.

With the average life tenure of an NHS chief executive currently averaging 20 months, this significant number of vacancies doesn’t come as a surprise. In fact, these figures arguably reflect the deep seated problems within the culture and environment in which NHS leaders operate. In an industry concerned with protecting lives, this lack of leadership is, in my view, becoming an additional and unnecessary hurdle organisations need not face.

Interim managers have and continue to play an integral role in helping the health service plug specific skills gaps. These experts can be used as part of the solution in tackling budget deficits and frequently deliver considerable savings, which can be reinvested into developing services that will ultimately improve quality of patient care.

Worryingly, after the Government’s review of senior interim staff in the NHS and their daily rates, a salary cap has been introduced (from 23 November 2015) where trusts are now not able to pay agency staff 55 per cent more than an equivalent permanent member of staff. The question is, can the NHS afford these changes to take place and what is the potential impact on patient safety and quality of care?

The importance of leadership

Moving into 2016, the key challenge for the NHS continues to be plugging the £22bn funding shortfall and responding to overall budget challenges, through severe cuts, improvements in productivity and a sharpened focus on efficiency.  In order to achieve this, without compromising the quality of patient care, the organisation’s staff and its ability to build strong senior leadership must be at the heart of its response.

There is no single right answer on how to balance the pressure to deliver a higher quality service with the severe squeeze on NHS finances. However, it is undeniable that new paradigms of thought will be required by senior leaders to make it happen. NHS boards have a major role to play and skilled leadership members with sector insight and commercial expertise are critical in order to formulate and implement the necessary strategic approach.

Filling the commercial expertise skill gap

The NHS Confederation recently published its member survey whereby “71 per cent of senior NHS leaders described the current financial pressures as the worst they have ever experienced”. With this financial pressure being felt so keenly, the sector requires commercial acumen now more than ever.

In recent years we have seen many NHS organisations benefit from commercially focussed interim managers, some from a private sector background, with a track record of achieving ‘more for less’ and identifying areas of revenue. Indeed, interim managers can provide an injection of specific expertise and introduce best practice processes within a fixed time period in order steer an organisation in the right direction for the future.

Although demand remains robust for interims in the sector, the 55 per cent salary cap could have a significant downward impact on market rates. This might continue to create a negative perception of a career in the sector, meaning there may be a significant shortage of both interim and permanent staff willing to fill the roles so desperately needed.

Value over cost

Focusing on the immediate cost of an interim rather than the long-term value can be a mistake when seeking to address the problems of the NHS. Interims are experienced professionals who, prior to becoming interims, have worked within specific sectors for a long period of time. As such, many can offer a granular understanding of the NHS and the complexities of the system, have a good network and are familiar with new and old policies.

When employed via a compliant provider who operates within a recognised framework, interims can be part of the solution in helping to help manage change and reduce costs, while ensuring a continued standard of patient safety and quality of care.

Protecting existing expertise and bringing in the right skills in senior positions will be fundamental to the development of healthcare services over the next five years, particularly at such an important and uncertain time in the NHS’s history.

Sarah Lovell, Partner at Odgers Interim

Sarah is a Partner in the Healthcare Practice, read Sarah's profile

Categories: Healthcare


Cameron Ward at 07/12/2015 11:25 said:

Thank you Sarah for the piece. A few observations.

Firstly - it is important to acknowledge the difficulties for senior interims to influence culture towards one which is collaborative and innovative if the culture is not conducive to such things. The NHS needs to be collaborative and support new care models through risks as otherwise innovation will not flourish. The interim will need to demonstrate the facilitative leadership approach as I believe this can be the only long-term gain albeit simultaneously making immediate positive impacts.

Secondly - the additional finances for the NHS are welcomed although this is likely to increase the pressure on the NHS to deliver on standards and make the huge efficiency requirements. It will raise expectations from social care as a way to assist them with their funding shortfall. It is vitally important for the funds to maximise the whole health and social care system as opposed to arguing in functional lines.

Thirdly - in terms of rates I believe as interims we need to accept there is some downward pressure on them and face the reality in the same way as many others in society. There remain great gains of a non-financial nature to interims in assisting organisations change and adapt to make them better able to meet the health needs of the population.

Sarah Lovell at 01/12/2015 11:51 said:

Thank you for your comments, Ed. I agree with you regarding the PM’s salary – I too think it lacks credibility.

I also agree, as a tax payer, it is incumbent upon boards to demonstrate good fiduciary duty and that public monies are spent well. I think there is some myth busting to be done regarding the use of interims within the NHS when you compare this to level of spend on consultancy for example.

You are right though, all interims should be short term appointments given the nature of the work they are brought in to deliver. I think the role of the interim is evolving within the NHS – there are high class people the system can draw upon who understand the service on a granular level and should be seen as enablers to drive change.

Interims introduced via ourselves aren’t classified as agency as they are self-employed, not employed by Odgers and because they tend to be VSM grade, the cap doesn’t apply, but to answer your question specifically, the 55% uplift on rates has been introduced to include on costs, yes, although I have it on very good authority, the findings from the Carter review were never intended for non-clinical management staff…..

Sarah Lovell at 01/12/2015 11:51 said:

Thank you for the comments, Bill. I agree with your sentiments entirely……

Bill Mather at 01/12/2015 09:00 said:

I wholeheartedly agree with your piece. More than ever at this time, NHS leaders need the capabilities to transform organizational ways of working, productivity of stakeholder engagement, and operational agility and resilience. This requires a mandate with authority to lead change and performance. It also requires access to expertise and experience beyond normal requirements. Monitor and DH can't help themselves but to dictate to leaders rather than empower the necessary innovations and creativity, and constrain rather than extend the skills and capacities to take on unprecedented challenges. The culture of the NHS continues to be highly problematic as the pressures result in yet more central controls and even less scope for front line initiative. This is not leadership; it is autocratic management!

Ed Macalister-Smith at 30/11/2015 18:58 said:

Yes, but...

Of course, I agree that the "benchmark" figure of the Prime Minister's so called salary is a silly figure against which to set top salaries.

But we are also a public service which spends public money - yours and mine - and it is incumbent on Boards to demonstrate that public money is being spent well. Just because bankers earn large bonuses is no excuse to compare our salaries running large, complex, high profile and risky organisations with theirs...

So, I also think that it is wrong for a public body to pay interims through a company structure, rather than through the payroll (unless it's a short appointment).

By the way, how does the +55% cap work for Director posts? Director salaries are not fixed in the same way as AfC, so presumably there is wriggle room to benchmark against the top quartile? And does the +55% include on-costs of a/l etc?

Sarah Lovell at 30/11/2015 17:02 said:

Dear Brian and David

Thank you for your comments - it is always good to hear back from people who have appreciated our thought leadership.

I agree with you both - I think it is incumbent on us to continue having value conversations with our clients, especially at this time and in addition, continue to generate interim opportunities for experienced capability who can support the NHS to deliver and drive the change required in order to meet their ever increasing efficiency targets.

Please keep talking to us and sharing your thoughts - as an aside, there is a further / follow-on piece to this, which has been picked up by a journal and will be published in January. I will share this with you both then - please also feel free to connect with me on Linked In, where I am frequently sharing pieces such as the above, which you may find good and useful insight into the sector.

Best wishes, Sarah

Brian Jopling at 30/11/2015 16:43 said:

I agree with your sentiments. What is also critical from both permanent and interim leaders is to the need to embody and demonstrate commitment and a spirit of taking responsibility for the organisation. This is what inspires staff to respond positively to change - it's true leadership. One wonders if the fee rate cap will discourage leaders who understand this and have the required skills from staying in the sector.

David at 30/11/2015 16:16 said:

Unfortunately the price cap clearly shows that price is what matters at the moment regardless of value. One of the consequences of this will be that the NHS can not attract those with the skills needed to help them make the changes needed to deliver the level of savings required. As such over time the financial pressures will increase further.