To What Extent Can Private Sector Approaches to Human Resource Management Be Directly Transferred Into the Public Sector? an Illustration of the Nhs Case

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Since the advent of new public management reforms, private sector managerial approaches are fast gaining attention in various public sectors. This is due to the belief that on-going global economic constraints and fiscal crises are demanding for more organisational effectiveness with minimal cost, and private sector practices are believed to be more efficient than its public sector counterpart. It is within this context that human resource management practices are being transferred into the public sector for better performance. However, several literatures have debated the numerous differences between the public and private sector and often concluded that effectiveness of privately transferred human resource practices into the public sector are likely to be strained (Rainey et. al., 1976). One argument is that public sector goals as opposed to its private counterpart, are unclear and intangible and therefore, outcome becomes difficult to measure towards performance. Moreover it is also argued that public sector workers are inherently motivated and as such cannot be monetarily motivated towards performance. Also, managers in the public sectors are often argued to have limited autonomy posed by politicians leading to a strain on the performance process. And finally, the constant financial deficit in the public sector has also been argued to limit its performance and reward systems. The case of the NHS as a public sector in the UK will be used to answer the above question. It will first start with a brief description of the NHS, and then provide an overview of what human resource management means and what its practices are. The effects of these practices (performance management, appraisals, and rewards) would then be reviewed in specific NHS examples in relation to the contrasting public environmental differences. Overall, due to the overwhelming literature demonstrating the ineffectiveness of HRM practices in the NHS or rather the inability of HRM and supporting studies empirically demonstrating the link between HRM practices and performance, this essay holds the opinion that the private sector practices of HRM should not be directly transferred into the public sector or at least should be cautiously transferred in its adaptation into the public sector.

The UK NHS was created for a comprehensive (quality), universal (equity) and free health delivery at its point of use. The search for effective delivery of services in the UK NHS prompted the NHS marketisation via the 1990 NHS and community care act. Markets divided the purchasing power from the providing power of health services thereby making Trusts (self-governing hospital) accountable for their performances. Perhaps, this division occurred because the effective management of human resources out of many other organisational assets was widely viewed as a better tool to address financial crises via organisational performance improvement (Huselid, 1995).

Due to the rapid rise of considerable interest in Human resource management over the last decade, there has been varying definition ascribed to its definition. This essay agrees with the Harvard definition in which Human resource management is viewed to encompass all managerial decisions that influences the relationship between the human resources of an organisation (it’s employees) and the organisation itself (Beer et. al., 1985, p. 1). Though, its practices have been grouped into various models, it is beyond the scope of this essay to discuss them. However, the general concept of its practices can be understood as the use of various strategies which includes amongst many others, performance management, appraisals and reward to effectively manage employee attitudes towards the organisation’s goal and performance...
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