Human Resources for Health BioMed Central

Commentary Open Access

What difference does ("good") HRM make?
James Buchan*

Address: Queen Margaret University College, Edinburgh, United Kingdom

Email: James Buchan* - jbuchan@[Link]
* Corresponding author

Published: 07 June 2004 Received: 03 March 2004

Accepted: 07 June 2004
Human Resources for Health 2004, 2:6
This article is available from: [Link]
© 2004 Buchan; licensee BioMed Central Ltd. This is an Open Access article: verbatim copying and redistribution of this article are permitted in all media
for any purpose, provided this notice is preserved along with the article's original URL.

Abstract
The importance of human resources management (HRM) to the success or failure of health system
performance has, until recently, been generally overlooked. In recent years it has been increasingly
recognised that getting HR policy and management "right" has to be at the core of any sustainable
solution to health system performance. In comparison to the evidence base on health care reform-
related issues of health system finance and appropriate purchaser/provider incentive structures,
there is very limited information on the HRM dimension or its impact.
Despite the limited, but growing, evidence base on the impact of HRM on organisational
performance in other sectors, there have been relatively few attempts to assess the implications of
this evidence for the health sector. This paper examines this broader evidence base on HRM in
other sectors and examines some of the underlying issues related to "good" HRM in the health
sector.
The paper considers how human resource management (HRM) has been defined and evaluated in
other sectors. Essentially there are two sub-themes: how have HRM interventions been defined?
and how have the effects of these interventions been measured in order to identify which
interventions are most effective? In other words, what is "good" HRM?
The paper argues that it is not only the organisational context that differentiates the health sector
from many other sectors, in terms of HRM. Many of the measures of organisational performance
are also unique. "Performance" in the health sector can be fully assessed only by means of indicators
that are sector-specific. These can focus on measures of clinical activity or workload (e.g. staff per
occupied bed, or patient acuity measures), on measures of output (e.g. number of patients treated)
or, less frequently, on measures of outcome (e.g. mortality rates or rate of post-surgery
complications).
The paper also stresses the need for a "fit" between the HRM approach and the organisational
characteristics, context and priorities, and for recognition that so-called "bundles" of linked and
coordinated HRM interventions will be more likely to achieve sustained improvements in
organisational performance than single or uncoordinated interventions.

Introduction ance has, until recently, been generally overlooked.

The importance of the human resources management Health sector reform in many countries in the 1990s
(HRM) to the success or failure of health system perform- focused on structural change, cost containment, the

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introduction of market mechanisms and consumer choice A similar, if more qualified, finding had been reported by
[1,2] but with little direct attempt to address HR aspects. Richardson and Thompson [10], who had noted: "There
are in the region of 30 empirical studies that have sought
In recent years it has been increasingly recognized that get- to address the relationship between HR practices and
ting HR policy and management "right" has to be at the business performance … The published research generally
core of any sustainable solution to health system perform- reports positive statistical relationships between the
ance [3,4]. This is partly a result of the need to upscale greater adoption of HR practices and business perform-
capacity in many country health systems to meet the Mil- ance" [10].
lennium Development Goals. A well-motivated and
appropriately skilled and deployed workforce is crucial to The key lesson from these reviews is that investment in
the success of health system delivery. The actual methods developing and maintaining effective HRM policy and
used to manage human resources in health care may in practice can make a significant and measurable positive
themselves be a major constraint or facilitator in achiev- contribution to organisational performance (see also
ing the objectives of health sector reform [5,6]. [11]). A more detailed examination of some of the key
texts in this area gives some general support for this view,
In comparison to the evidence base on health care reform- but also pinpoints some of the limitations, particularly if
related issues of health system finance and appropriate the results are to be considered from a health systems
purchaser/provider incentive structures, there is very lim- perspective.
ited information on the HRM dimension or its impact [7].
There is a limited, but growing, evidence base on the One sector-specific issue has to be considered when look-
impact of HRM on organisational performance in other ing at the implications of the current evidence base for
sectors, but there have been relatively few attempts to HRM practice in the health care sector. Almost all the
assess the implications of this evidence for the health sec- mainstream general research on HRM and organisational
tor. This paper examines this broader evidence base on performance assessed in the reviews highlighted above
HRM in other sectors and examines some of the underly- focuses on private-sector business corporations. Much of
ing issues related to "good" HRM in the health sector. it relies on measures of organisational performance (e.g.
profits and return on sales) that cannot readily be applied
"Good practice" in human resource management to a public sector health system.
In order to place the evidence base on HRM in health care
in context, this section considers how "good practice" in Richardson and Thompson [10] noted that there were
human resource management (HRM) has been defined three broad perspectives on the ways that HR practice con-
and evaluated in other sectors. Essentially there are two tributes to business performance:
sub-themes: how have HRM interventions been defined?
and how have the effects of these interventions been 1) "Best Practice" – a set of HR practices can be identified,
measured in order to identify which interventions are that, when implemented, will improve business
most effective? In other words, what is "good" HRM? performance.

A review of English-language publications highlights that 2) "Contingency" – business performance will be

there is a growing evidence base on these issues. Much of improved when the best "fit" between business strategy
it focuses on organizational-level studies using large-data- and HR practices is achieved.
set analysis to examine the relationship between HR inter-
ventions and measures of organisational performance and 3) "Bundles" – specific bundles of HR practices can be
output, where the latter are defined in terms of private sec- identified that will generate higher performance in organ-
tor "business" success – profits, returns on sales, etc. As isations; the most effective composition of these "bun-
well as single-study publications, there have also been dles" will vary in different organisational contexts (see
some published reviews. These reviews are discussed first. also [12]).

One recent multisector review of research on the relation- This latter point is significant because it highlights that
ship between HRM and organisational performance there is no "magic bullet" in HRM: no single intervention
reported that "more than 30 studies carried out in the UK is likely to provide a sustainable solution to all the work-
and US since the early 1990s leave no room to doubt that force challenges facing an organisation.
there is a correlation between people management and
business performance, that the relationship is positive, Richardson and Thompson [10] summarised six key
and that it is cumulative: the more and the more effective points from their review of the literature:
the practices, the better the result" [8] (see also [9]).

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1) The claims that there is a universal best practice HR Characteristics". These included: formal information shar-
strategy "are premature". ing; formal job analysis; staff participation in Quality of
Work Life (QWL) programmes; workforce receives formal
2) Adopting a specified set of HR policies will not in itself performance appraisal; and promotion based on merit.
lead to organisational success.
Huselid tested the hypothesis that these 13 "High Per-
3) The same "bundle" of HR policies may not be univer- formance Work Characteristics" would reduce staff turno-
sally applicable. ver, increase productivity and improve corporate financial
performance. Based on an analysis of data from 968 US
4) Virtually all current statistical analysis of HR strategies companies he reported that the implementation of the
is based on "adding up a mixture of items from a some- "High Performance Work Practices" led to "better firm
what arbitrary list of HR policies and practices". performance" – a relative 7% decrease in staff turnover,
USD 27,000 more sales per employee, USD 18,600 per
5) More evaluation attention needs to be devoted to employee increase in market value and USD 3,800 per
examining the intermediary steps between the two end employee more in profits.
points of HR strategy and organisational performance.
Whilst the work of Pfeffer, Huselid and others may be per-
6) "How something is done is often more important than suasive, Robinson and Thompson [10], Guest [16] and
what is done" – but existing empirical studies concentrate others have questioned the basis of some of the "univer-
on the latter. sal" claims made about the connection between HRM
strategy and organisational performance. They report that
With these cautionary notes in mind, the remainder of they are not convinced by the idea that there is a general
this section highlights the more influential studies on prescription of HRM interventions that can be applied in
HRM and organisational performance from which Rich- any organization, irrespective of context and priorities,
ardson and Thompson, and Caulkin, drew in reaching with the likelihood of a similar level of response and
their conclusions. results. Guest [16] stresses that the examination of HRM
and organisational performance remains a "young field of
Among the most quoted groups of studies are those by research" and sets out a range of methodological chal-
Pfeffer [13,14]. He has summarised seven characteristics lenges that remain to be resolved, in terms of the measure-
that he identifies as the core practices that "characterise ment of HRM, the measurement of performance and the
most if not all systems producing profits through people". measurement of the relationship between the two
These seven characteristsics are: (p.1095). He does, however, conclude that "results from
both cross sectional and longitudinal research remains
• an emphasis on providing employment security robustly positive" (p.1104).

• the use of self managed teams Recent research [17] has also highlighted a so-called
"prime building block" of HRM – the principle of "AMO".
• decentralisation of decision making; and extensive There must be sufficient employees with the necessary
training ABILITY (skills, knowledge and experience) to do the job;
there must be adequate MOTIVATION for them to apply
• selective hiring of new personnel their abilities; and there must be the OPPORTUNITY for
them to engage in "discretionary behaviour" – to make
• reduced status distinctions and barriers choices about how their job is done. The authors suggest
that organisations wishing to maximize the contribution
• extensive provision of training of their workforce need to have workable policies in these
three broad areas.
• compensation linked to performance [14].
The message from the key research on HRM and organisa-
Pfeffer drew on previous research, notably that by Huselid tional performance is that the evidence base, although rel-
[15] in developing and testing his seven-point plan for atively "young" and limited, does provide general support
HRM intervention. Huselid had concentrated on three that good practice in HRM (defined and measured by dif-
aspects of the measurement of the links between HRM ferent sets of indicators in different studies) can make a
practice and firm performance: staff turnover, organisa- positive difference to the performance of the organiza-
tional productivity and corporate financial performance. tion. The indicators and metrics used to identify and
He had developed a list of 13 "High Performance Work measure organisational performance are either "proxy"

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measures, such as staff turnover or absence (the inference appropriate and sector-specific measures of process, out-
being that lower turnover, for example, will lead to put or outcome.
improved performance), or measures of activity or finan-
cial performance. These studies examine a range of differ- There have been a few attempts to examine "high per-
ent sectors, but have focused mainly on the private sector formance" HRM characteristics in the health sector. These
manufacturing, finance and service industries. What are tend to be based in North America, which may be partly,
the lessons and implications of this limited but growing at least, a reflection of the greater focus on "business"
evidence base for the health sector? practice in private-sector health care industries in the USA
and Canada.
HRM in the health sector
HRM in health has to function in a sector with some Eaton [18] examined issues related to "high performance"
unique characteristics. The workforce is large, diverse, and HRM in 20 nursing homes in the USA. She reported that
comprises separate occupations often represented by quality outcomes at some of the homes improved after
powerful professional associations or trade unions. Some reorganisation that included implementation of a new
have sector-specific skills; other can readily move from the model of HRM based on job enlargement and cross-train-
health sector to employment in other sectors. The avowed ing, but concluded that the "business" focus of the "high
first loyalty of those with sector-specific skills and qualifi- performance model" made it inappropriate for the health
cations (physicians, nurses, etc.) tends to be to their pro- care sector. Rondeau and Wagner [19] examined the
fession and their patients rather than to their employer. impact of HRM practices and the contingency theory on
283 Canadian nursing homes. They reported that the
In many countries, access to health professional training "best performing" nursing homes (as measured by indica-
and employment is controlled by standards and entry tors of client and staff satisfaction, operating efficiency
requirements determined by the professions, and aspects and revenue) were found to be more likely to have imple-
of their work are regulated. The health sector is a major mented "progressive/high performance" HRM practices
recipient of public and/or private expenditure, and health and to have a workplace climate that strongly values
care delivery is a politicised process. employee participation.

Whilst many health systems have been attempting to Studies that can access "business" performance data in
decentralise to improve efficiency, they tend to be charac- health are few in number. There is a broader and deeper
terized by a broad range of active stakeholders, a high evidence base that focuses on health sector-specific meas-
level of direct and indirect governmental and regulatory ures of process, activity or outcome, and attempts to link
intervention, and recurrent "top-down" attempts at these to HRM interventions.
reform. Health is also very labour-intensive – the propor-
tion of the total spent on staff is much higher in health One area where there has been a significant growth in
than in most manufacturing industries and in many serv- research has been large-scale studies examining links
ice industries. between staffing levels, mix and outcome in the last two
years. Whilst not directly addressing specific HRM inter-
The irony is that whilst HR is under-researched in health, ventions, these studies make two contributions: they add
partly because of its unique context, the main "business" to our understanding of the linkages between staffing and
of health – clinical interventions – is the subject of contin- outcomes, and they also provide a test bed for identifying
uous and detailed research-based scrutiny. No other sector and assessing the appropriateness of outcome indicators
has the same level of self-critical focus, with the use of in relation to staffing. Recent studies include:
sophisticated methods such as randomised control trials
(RCTs), systematic reviews and meta-analysis. • an examination of staffing and outcomes (fall rates,
nosocomial pressure ulcers, urinary tract infections and
Research on human resources in health, as in any sector, patient satisfaction scores) in 29 university hospitals [20];
is drawn from a broad range of disciplines, (e.g. econom-
ics, econometrics, occupational psychology, sociology). • a study of nurse staffing, organisation and quality of care
Some of these disciplines are not open to the use of the in 303 hospitals in the USA, Canada, England, Scotland
types of methods favoured in clinical research in health and Germany [21];
care. The challenge for researchers attempting to build the
evidence base on HRM in the health sector is that they • a study of staffing levels, mix and outcome indicators
have to draw on these non-clinical research methods to (patient length of stay; UTI, pneumonia, etc.) in 799 hos-
assess the HRM "inputs" whilst attempting to identify pitals in 11 US states [22];

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• an examination of nurse staffing, patient mortality rates Research on magnet institutions has been under way for
and failure to rescue (FTR) in 168 hospitals in Pennsylva- over 20 years, and has highlighted positive links between
nia [23], good human resource practice, staffing characteristics and
outcomes of care.
• an examination of mortality rates, patient length of stay
and cost of care in relation to pharmacy staffing in about The genesis of the research on magnet hospitals was the
1000 US hospitals [24]; policy study published in 1983 [30]. The study identified
the organisational characteristics of hospitals that "serve
• a study of nurse staffing levels and mix (RN, LPN and as magnets for professional nurses: that is, they are able to
assistant) in relation to the prevalence and severity of attract and retain a staff of well-qualified nurses and are
decubitus ulcers in the USA [25]; therefore consistently able to provide quality care. The
term "magnet" was used to highlight the staff attraction/
• a study of nurse staffing, skill mix and outcome indica- retention characteristics of these institutions.
tors (30-day mortality, stroke, pneumonia, etc.) in 75
acute-care hospitals in Canada [26]; The key characteristics of magnet hospitals, as identified
in this first report, included participatory and supportive
• an examination of staffing levels, workload and risk- management style, decentralised organisational structure,
adjusted outcomes (e.g. mortality, cerebral damage) in clinical career opportunities, planned orientation of staff,
186 neonatal intensive care units in the UK [27]; and an emphasis on in-service/continuing education.

• a study of nurse staffing and post-surgical events (e.g. The report stimulated other researchers to focus on organ-
venous thrombosis, embolism, UTI, etc.) in hospitals in isational attributes, HR practices and measures of HR
six US states [28]; "success". There has since been a series of research studies
on aspects of "magnetism". These have included studies
• a study of nurse staffing and needlestick injuries in 20 reporting that nurse turnover and vacancy rates in the
US hospitals [29]. magnet hospitals were significantly lower, and reported
nurse job satisfaction higher, than in the comparator hos-
Most of these studies have reported that higher staffing pitals [31] and a study examining mortality rates in 39
levels and/or staffing mix are related to "better" outcomes, magnet hospitals and 195 control hospitals using multi-
however defined – either to reductions in the levels of variate matched sampling to control for hospital charac-
specified "negative" outcomes (such as mortality rates, teristics. The study found that magnet hospitals had a
needlestick injuries, or infections) or improvements in 4.6% lower mortality rate for Medicare patients than the
reported quality of care or patient satisfaction. control hospitals [32].

Whilst most of these studies are "one-off" examinations, Magnet hospitals are accredited by the American Nurses
there is one series of loosely-linked studies in the USA that Credentialing Center (ANCC). There are over 100 magnet
has investigated the so called "magnet hospitals". These institutions in the USA, and the first has recently been
institutions have been identified as being successful in accredited in the UK [33]. The ANCC has summarized the
recruiting, retaining and motivating nursing staff. evidence base on magnet institutions (see Table 1).

Table 1: Reported characteristics of organisations with Magnet accreditation

Reduced Medicare mortality and morbidity rates

Reduced mortality rates associated with the care of patients admitted to acute care settings with AIDS
Increased levels of patient satisfaction
Significantly lower rates of nurse burnout
Reduced needlestick injury rates among nurses
Significantly higher educational preparation of the registered nurse workforce
High levels of nurse autonomy and nurse control over practice
Positive relationships with physicians
Nurses' perception that they have adequate support services and enough RNs to provide high quality care
A powerful and influential nurse administrator
Nurses in Magnet facilities perceive that their contributions are greatly appreciated
Decreased likelihood of feeling burned out, emotionally drained or frustrated with their work
Decreased likelihood of nurses' reporting they are dissatisfied

Source: ANCC [35]

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Table 2: Examples of HR/staffing-related indicators

"Activity"/Process-related Beds
Occupied beds
Outpatient visits
Client contacts
Staffing-related Job satisfaction (measured by attitudinal survey instrument)
Accidents/injuries
Absence
Assaults on staff
Vacancy rates
Overtime
Turnover/stability/retention
Use of temporary staff
Care-related (Output/Outcome) Patient length of stay
Readmission rates
Live births
Mortality rates
Urinary tract infections
Pneumonia
Shock
Upper gastrointestinal bleeding
Deep vein thrombosis
Pressure sores/ulcers
Cross-infections
Patient satisfaction survey

Source: Buchan [36]

The evidence base on "magnet" organisations has grown that there is some evidence that not all the outcome-spe-
and broadened over the two decades since the original cific indicators in the final section of Table 2 are univer-
study. The main message from the various studies is that sally applicable. The large-scale study of nurse staffing and
"magnetism" does appear to be related to "better" staffing outcomes in the USA [22] considered and rejected some
indicators, and to improved quality of care. This has been indicators and reported that some outcome indicators are
attributed by Aiken and others to the sustained imple- more sensitive than others in particular types of care
mentation of a "bundle" of HRM interventions that fit delivery.
with organisational priorities and that support autono-
mous working by nurses, enable participation in decision Conclusions
making, facilitate career development and enable high It is clear that it is not only the organisational context that
level skills to be deployed effectively. differentiates the health sector from many other sectors, in
terms of HRM. Many of the measures of organisational
What health sector-related indicators can be used to assess performance in health are also unique. As noted in the
the impact of HRM interventions? Table 2 sets out a range previous section, "performance" in the health sector can
of data that have been used as indicators in the health sec- be fully assessed only with indicators that are sector-spe-
tor, when staffing have been the primary focus of atten- cific. These can focus on measures of clinical activity or
tion. This list is only illustrative; a wide range of clinical workload (e.g. staff per occupied bed, or patient acuity
outcome indicators have been considered or used. For a measures), on measures of output (e.g. number of
more detailed examination, see Needleman et al. [22]. patients treated) or, less frequently, on measures of out-
There is also a range of staffing: process/output/outcome come (e.g. mortality rates; rate of post-surgery complica-
indicators summarised in a "basket of indicators" in tions). The challenge for researchers and policy analysts in
Hornby and Forte [34]. the health sector is to bridge the current knowledge gap –
between what we know from the general evidence base on
Some of the indicators, particularly the clinical indicators, HRM inputs and performance, and what we know from
are likely to be routinely reported only in health systems the health-specific evidence base focusing on sector-spe-
with a relatively sophisticated information infrastructure. cific outcome measures.
And some of the indicators (e.g. patient length of stay)
may be proxy measures for costs. It should also be noted

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