Berkshire NHS is part of Great Britain’s nationally funded health system, but its finance function is not so different from any other. Like most of its counterparts everywhere, the Berkshire finance team spent much of its time creating detailed annual budgets for the organization and all of its various divisions. Finance leaders analyzed the needs of units and clinics based on previous demand, allocated resources, and then tried to understand what went wrong.
They made budgets, argued about budgets, and audited compliance to budgets. It was never the most satisfying part of the job.
And so, in 2019, the finance team took its first running steps toward a very big leap. Before we follow them into that unknown, it is important to know a little bit about Berkshire and the people who would do such a thing.
Back in 2011, Berkshire NHS was solely a provider of mental health services.1 It was well regarded and had good national ratings. Then the NHS decided that Berkshire should be merged with another healthcare trust—this one providing a range of services for the population’s physical well-being, including home health care—and Berkshire leaders needed to reconsider how they were organized.
“It gave us the opportunity to really look at our organization and start reading broadly about organizational development,” says Julian Emms, CEO. “We started using surveys to measure how people were engaged and to train managers more systematically. And because we were listening to people more, we started to fix some basic problems and gripes. We improved some of the physical conditions, upgraded IT where needed. We created some trust.”
And then in 2015 came one of the big care-quality inspections by NHS. These used to happen every two or three years and were very disruptive—100 inspectors descending on an organization all at once, turning over every rock.
“We received a ‘Good’ outcome—a strong B rating—but it required a huge amount of effort beforehand,” remembers CFO Alex Gild. “There was a lot of firefighting just before inspectors arrived. We dreaded the next inspection.”
Discussions after this experience left leaders with two strong goals: to find a better way to improve at a steadier cadence and to earn that rating of Outstanding.
Julian teamed up with the chief medical officer and chief nursing officer and began going to healthcare improvement conferences and touring health systems—such as Western Sussex NHS2 and Virginia Mason in Seattle—looking for a path to improvement that seemed honest and sustainable. The three of them reported back to the rest of the executive team as they explored, and by the time that they were deciding to focus on organizational excellence, just about everyone was on board.
When they interviewed different consulting groups about partnering with them, the consultants faced a panel of about 100 people who were curious about how they were proposing to train and guide their people.
“The real pleasure of the journey for me was that we learned together. That was a privilege. From being introduced to something like leadership standard work to putting it in motion. We dedicated time to this—even whole days—to work with coaches together and alone,” Julian says.
“Early on, we were all struck by how much work, how much time and effort were involved for all of us. People wondered how we could possibly do it all, and I listened and, well, I agreed. But we all worked it out time-wise because we knew we were working out a better system for everyone. Firefighting, you know, just takes too much time.”
In many ways, Berkshire began in an enviable position. Leadership came from a common experience—that enormous effort preceding the quality inspection that resulted in a Good rating—and were unified in their goal to find a better way to improve. They had a culture of working in teams and did not need to eradicate a lot of command-and-control behaviors.
Their goal, in fact, was even more unity. As they did the hard work of rearranging their schedules for coaching and gemba walks and huddles, and while learning to be responsible to one another as they practiced new behaviors, Alex Gild was keeping his eye on his big goal: aligning and integrating support services—and especially finance—with the clinical side.
“I really felt unsure that this could happen, frankly,” Alex says. “Did the organization have line of sight back to our real goals? People didn’t use our information. We’re in a fast-paced environment, so I understand. I could see they didn’t feel a strong ownership in the budget. It wasn’t set by them. It wasn’t necessarily useful.”
Creating line-of-sight from operations to organizational goals began to happen as units huddled around moving the needle on performance metrics, discussing why certain kinds of improvement were emphasized. When senior leaders decided, for instance, to improve patient safety throughout Berkshire by eliminating patient falls, every unit and every huddle was talking about how they could keep their own patients from falling.
In status exchanges and huddles, they also discussed how resources were used and financial analysts helped teams understand and track business measures such as annual leave patterns and staff sickness, along with lagging indicators such as required hours of temporary staffing and the cost of different types of staffing. In time, clinical staff and financial analysts were speaking something very close to the same
For both operations and the finance department, however, the budget—with its annual batch of assumptions and rearward looking nature—was still a pain. Considering the direction of the rest of Berkshire, Alex thought, the budget was too top-down and inflexible. It did not accurately reflect the issues people were facing as they tried to set and achieve goals. In 2019, it was time to see if they could get rid of it.
Alex’s goal was to replace the annual budget with a system of rolling forecasts and to transition every unit and department over with a program he called Beyond Budgeting. What is really noteworthy here is how he opted to begin this process.
Looking out over an annual budget report, it is easy to see that there are almost always units that struggle to manage their resources year over year. Frontline managers often take the blame, or extenuating circumstances are cited. But Alex decided to look at these units through A3 thinking. How could he and his team use root-cause analysis to better understand the issues at play?
“Our idea was to embed one of our finance managers in a unit to understand what was truly driving performance,” Alex says. “So, for instance, Nikola spent six weeks working with an inpatient learning disabilities unit that had gone over budget by about half a million pounds every year. But we weren’t there to understand why they couldn’t stick to their budget. We were there to understand their needs.”
Working with staff on the unit, Nikola helped them build a model of capacity and demand, which begins by determining the two or three key operational drivers of demand (patients) and capacity (staffing) and forecasting the impact of those drivers on required resources. Once the operational drivers were understood, they could create financial projections on a rolling basis.3
Using the capacity-and-demand model, it was soon clear that the unit had been choking on scarcity. Without enough full-time staff members on board, leaders were consistently forced to fill in the schedule with more expensive temporary caregivers from an agency. If the unit was allowed to hire two new staff members, they found, they could almost entirely stop using the agency and save at least 20 percent of labor costs.
THE ROLLING QUARTERLY FORECAST
That does not mean they would be “in budget,” however, because their budget was eliminated. In its place, Nikola helped them create a rolling forecast, which is an estimate of the unit’s future needs, based on a deeper understanding of demand, updated quarterly.
Instead of imposing numbers on divisions and frontline units, finance managers would be helping unit managers create their quarterly forecasts of resources needed, rolling up those numbers into organizational forecasts, and then dispatching managers and accountants to help people that run into imbalances of capacity and demand. When gaps appear between target states and forecast, support-service personnel from finance, HR, IT, and QI would also be available to help unit managers improve.
Within the first six months of the beyond-budgeting experiments, Nikola did multiweek tours in podiatry and mental health inpatient services. She did not go so far as to move her desk and tea mug to those units, but she spent a lot of time there to understand their resources and demand. Then she helped managers create a forecast and left each unit liberated from its annual budget. And she became convinced that getting rid of all annual budgeting was entirely feasible.
More important, Nikola and Alex were changing the old conversation between operations and finance. Instead of beginning a meeting with clinic managers believing that they knew what the budget was—what the clinic “deserved”—they were going in with curiosity and humility, knowing that they needed to learn needs of that business.
Every unit that was introduced to the beyond-budgeting concept needed to have a daily management system—with regular status reports, daily huddles, and A3 problem solving to keep everyone focused on current conditions and root causes before solutions—to ensure that it had the QI maturity to ask the most relevant questions about its capacity and
“This is a big change. But the benefit to the services is that they are getting resources released because we now have a much better understanding of what they really need,” Alex says. “We are becoming better partners.”
STEPPING UP THE STANDARDS OF RESPECT
That desire for partnership often runs both ways, we have found. At Berkshire, change was initiated at the top. But at UMass Memorial Health Care, it was a staff-generated opportunity that led to partnership.
Remember that Standards of Respect initiative that was aimed at changing behaviors at the health system in Worcester, Massachusetts, the little city with a big chip on its shoulder? That actually began as a movement among caregivers that was embraced by HR as an opportunity to change the culture.
“This is a little embarrassing, because we knew that respect had been an issue with us, but the work really started with a nurse manager who was distraught about how she and others were treated,” says Tod Wiesman, chief learning officer and VP of organizational people development. “She was 120pretty new here and was shocked at how people responded to conflict—at the language used and the rudeness.”
Executives knew about the problem. Over the years, they had made attempts at fixing it. They wrote codes of behavior that nobody remembered. They tried to push standards but did not pass along a compelling argument for why anyone should change.
It was nurse manager Alicia Wierenga, finally, who said enough. She started talking about the problem with a few like-minded people. Their numbers grew to include physicians and therapists and others, and they began meeting to talk about how things should be and how they could get there. They started a movement.
“They did not want us in HR involved, at first,” Tod remembers. “They did not want this to be a corporate thing. But finally, they allowed us to help a little.”
What the group wanted was some compelling data, a starting point to make their case. So they created that simple, two-question survey on feelings of respect, filled buckets with candy and slips of paper with the questions, and offered people treats in return for answers. They got 2,300 responses and brought their findings to Tod for help analyzing the data. He found there was enough statistical significance in the answers to identify six major themes: listen, be kind, acknowledge, communicate, be responsive, and be a team player.
“A small group of us sat down and fleshed out the details of each standard based on those survey responses,” says Laura Flynn, director of performance, learning, and education. “We knew that we needed to have training around this. But we didn’t want it to be just about training. We needed a surround-sound approach.”
By that, they meant a way to embed these ideals in everything from marketing to hiring and promotions. After so many years with inadequate solutions to an intractable problem, they wanted a moon shot.
CEO Eric Dickson wanted that moon shot, too. He told Tod and Laura and the team that he wanted them to present their biggest, best ideas for this Standards of Respect at a big executive meeting in February 2018.
For two months prior, Tod and Laura and others in HR cleared their desks and did little else than read, investigate, and plan how they could create awareness. They wanted a tool to help promote the concept, something tactile and memorable. They came up with a deck of 20 cards for the standards and the behaviors related to each, reminding people what it actually meant to be kind, to acknowledge, to truly listen:
• Acknowledge. Notice others and recognize their contributions or concerns.
• Listen. Give your full attention to show you understand and care about what others say.
• Communicate. Share appropriate information generously and as soon as possible.
• Be responsive. Respond in the expected time frame to show others’ priorities are important to you, too.
• Be a team player. Do your work in a way that also helps others.
• Be kind. Choose to be friendly, patient, and compassionate—even when it’s easier not to.
A sample of this card deck is shown in Figure 6.1.
FIGURE 6.1 A Sample of the Standards of Respect Card Deck
ADDING 360-DEGREE ASSESSMENTS FOR LEADERS AND MANAGERS
With their beautifully produced cards, their origin story, and a plan for rolling out a series of two-hour workshops across the organization, Tod and Laura went to the big executive meeting hoping for acceptance. What they got was an enthusiasm they had not bargained for.
“Dr. Dickson got up and said the standards should be more than just awareness training. We would also be including 360-degree assessments for leaders and managers,” Laura recalled. “We did not know that would be happening.”
The assessments would not be performance reviews, but a kind of plan-do-study-act (PDSA) cycle on the question of behaviors, they decided. Once a year, a manager or executive would select their review group, including a direct manager, a few peers, and a few people that report to them (Figure 6.2, see next page). Reviewers would answer a questionnaire detailing what three behaviors the person was getting right and three areas in which he or she might improve (Figure 6.3).
FIGURE 6.2 Stepping Up Respect: Manager Feedback. These are the questions to be answered by a manager’s selected review group.
FIGURE 6.3 Stepping Up Respect: Manager Feedback Report
The leaders would then create a plan to strengthen their positives and improve in their areas of weakness. This opportunity for personal improvement added a level of responsibility that we believe should be present in every organization.
“We called it Stepping Up Respect, and it made sense to us because it’s the people in leadership who are the models for behavior,” Tod says. “Respect for people—that all-important pillar of our work here—can feel like a platitude without texture or teeth. We needed something like this to show that respect has equal importance with the second pillar, process improvement.”
TRAINING WITH A VOLUNTEER CORPS
The HR team put a lot of research and thought into the training segment, too, creating a two-hour workshop that used a lot of humor and video clips to get the message across. There’s always a lot of laughter coming out of those sessions, Laura reports, which is a good way to go into the written self-assessments that everyone does, looking at their own behavior.
In the first 18 months of the rollout, 400 workshops were held throughout the five acute care and community hospitals and six urgent care clinics of UMass. Approximately 10,000 caregivers had received the training as of the end of 2019, out of the total 14,000 employees.4
Putting on all those training sessions stretched the HR resources beyond capacity, so Tod and his team asked for volunteers to help lead the sessions. They ended up training 40 volunteers from throughout the organization to lead the workshops in teams of two, and most of those volunteers went on to give at least one training.
“I’m still pretty new here, and I can tell you it was highly unusual to see a grassroots initiative like this fully supported by leaders,” says Jena Adams, a consultant in organizational and people development. “And it still feels grassroots in many ways.”
PLANNING A PARTNERSHIP WITH STRATEGIC DEPLOYMENT
One more model of HR-operations partnership that is worth mentioning here comes from Sandra Geiger at Atrius Health, a nonprofit system of 31 multidisciplinary practices across central Massachusetts with 6,600 employees serving 745,000 patients. Less grassroots-driven than the work at UMass Memorial, it is a partnership model rooted in Sandra’s expertise in hoshin kanri.5
A former physical therapist who became passionate about improving the patient experience at another large health system in Massachusetts, Sandra became VP of performance excellence there on the strength of her work leading the transformation of the ED. As she was working to spread the ideas of continuous improvement, however, the CEO of that health system retired, and a new CEO came in with a different direction in mind. It was a familiar story.
In 2017, the leadership team at Atrius Health—which had islands of excellence left over from earlier work with a consulting group—wanted help organizing their improvement work in a more holistic way and hired Sandra to assist in rebuilding their hoshin system and oversee operational transformation priorities.
Over the course of a year, Sandra worked with the senior executive team to create their True North measures, an x matrix with their mission-critical initiatives, and standardized work for regularly assessing their progress. Then, she worked with the eight major service lines—including obstetrics, internal medicine, and so on—to develop their hoshin initiatives, each with an x matrix that was linked to the senior executive team’s priorities.6
Sandra also began teaching and supporting the daily management system to those that were interested, with an emphasis on local problem solving. Then the chief people officer—head of HR—left Atrius Health and Sandra was asked to apply for the job.
This was a $2 billion organization with more than 1,100 caregivers, and Sandra had never run a human resources organization. “But the CEO, Steven Strongwater, told me we already had skilled directors in the department with technical knowledge. What he wanted was a leader who could create partnerships within the organization, to strengthen the relationship between people and strategy,” Sandra said.
Specifically, he wanted her to integrate the hoshin work of the executive leadership team and the service lines with critical HR functions and then supply the right training and assistance in the right areas.
Working with her directors in HR, Sandra led a reorganization of that department to break down some internal silos. And then she asked her directors to change their focus.
“Our most important customers in HR need to be the 400 organizational leaders of Atrius Health,” Sandra says. “We need to understand their strategic needs and operational challenges and offer support and advice, where needed. Maybe it was in customized hiring plans, compensation, and incentives that support organizational objects, or in change management. We needed to be looking ahead, to offer early help and do it while modeling the right problem-solving behaviors.”
In some cases, this meant carefully planned coaching. For instance, if one of the practices was preparing to change roles among the clinical staff—requiring some nurses to perform more hands-on patient care versus offering phone support, in order to create capacity for billing providers—then Sandra would want staff from Organizational Development involved early, consulting on how to manage change and be part of the work redesign.
But this kind of early intervention had not always been part of the HR approach. It was a new role for many. So, Sandra spent extra time with her HR leaders explaining the organizational hoshin objectives and how they played a role in helping to achieve it. She actively gave her people coaching support before they had crucial conversations because she knew that showing respect, humility, and curiosity would set the tone for the whole interaction.
As the hoshin director, Sandra could look across the organization’s 11 x matrices and plan how to deploy the various types of expertise in HR to support the different strategies. In late 2019, she was seeing early signs of positive change as the service lines were beginning to reach out and ask for more specific
There are many talents in healthcare’s support services that go wasted without solid, respectful partnerships. Too often, for instance, IT staff are thought of as software jockeys and data collectors, when they should be collaborating in the design of new patient care delivery. These are people who are trained to think in terms of information flow, and that is a powerful addition to a team. Yes, IT staff members also have insight into how any new care process will intersect with electronic medical records and how new ideas can be supported in the digital realm. But they also bring fresh perspectives and new habits of thinking to a team.
Likewise, marketing should be partnering with every leader that undertakes strategic planning. This is what marketing professionals were trained to do.
And the quality team—with its inside information on trends in bacteria contamination and hospital-acquired infections—should be assisting senior leadership in guiding the focus of the organization.
Partnerships are only possible by sheer luck—when the right people with friendly relationships fall into the right positions—or when everyone firmly believes in a set of agreed-upon leadership behaviors. Practicing these behaviors can be thought of as a shortcut to having a decades-long friendship built on trust and mutual respect.
Sometimes the glue that holds us together must be consciously made, practiced regularly, and come with system of responsibility to ensure that we remain the best versions of ourselves. It is not a failure to admit that we need this help.
1. The NHS rates health trusts as Outstanding, Good, Requires Improvement, or Inadequate. Berkshire was rated Good.
2. We had been working with the Western Sussex acute care health system for a couple of years at this point, and leadership was deeply engaged in improving its six major hospitals serving about a half million people. In October 2019, Western Sussex became the first NHS Foundation Trust to earn a rating of Outstanding in all six areas of quality review.
3. Traditional budgeting environments typically feature a top-down allocation of fixed financial budgets not directly linked to operational drivers, which are therefore much less useful in describing current-state realities, let alone predicting future financial performance.
4. All employees are called caregivers, and the workshop was required for everyone.
5. Hoshin kanri is the Japanese term for policy or strategy deployment—a consistent process to ensure that all levels of an organization are acting upon the strategic goals set by top leaders. While we usually use the term strategy deployment, here we honor Sandra’s use of hoshin.
6. This is a three-level hoshin kanri, with interlinked x matrix planning: the senior executive hoshin is level zero; the major service lines are level one; and the support services such as HR and IT are level two.