Stafford Hospital: Leadership and Governance Problem Report

Introduction

Public sectors in different countries have been forced to adjust to changes originating from the macro and microenvironments. Therefore, public officials should develop their skills, capabilities, competencies, and knowledge in order to execute their roles and responsibilities effectively. Most Organisations for Economic Development and Cooperation [OECD] member countries are focused on implementing effective reforms within the public sector in an effort to ensure that the offered services align with the contemporary needs of the society (Kitchin 2010). Lipman and Lipman (2006) highlight the existence of a gap between organisational culture and the public needs as one of the major challenges facing service delivery in the public sector. Lack of dedication is one of the underlying values in the public service. Therefore, there is an urgent need to fix the problem through effective leadership. Koch and Dixon (2007, p. 431) assert that in addition ‘to traditional leadership abilities such as providing vision, strategy, inspiring, and mobilising people to perform, there is now a need for new leadership capabilities’.

Numerous cases of leadership and governance problem in different organisations, sectors, and economies have been documented over the past years. The Mid Staffordshire Trust case, which runs the Stafford Hospital, is a classic example of the existence of leadership and governance problems in organisations. The Mid Staffordshire NHS Foundation Trust failed in delivering the services expected by the patients and their families. A public inquiry into the case conducted by the UK government between 2005 and 2009 revealed that the hospital developed a negative culture that affected service delivery. The inquiry revealed that over 1,200 patients died between 2005 and 2009 due to poor environment.

Aim and scope

This report evaluates the case of Mid Stafford hospital with reference to the issues within the institution. The evaluation is based on theories of leadership and corporate governance. Moreover, the report assesses the ethical concepts, environmental, and emotional intelligence that organisations should consider in their operations.

Corporate governance

Between 2005 and 2008, Mid Stafford Hospital was characterised by appalling quality of care. The poor quality of care occurred under the management of a board that was appointed to assist the hospital to acquire a Foundation Trust status. However, numerous complaints from patients motivated the government to conduct an extensive inquiry into the hospital’s operations. The inquiry entailed an intensive investigation on the hospital’s operations that lasted for 139 days (Campbell 2013).

The inquiry revealed that the board was ineffective in dealing with the governance issues that were clearly depicted by the trend in the hospital’s performance. For example, in 2004, the hospital rating by the Commission for Health Improvement declined from a 3-star rating to zero. Moreover, other reviews conducted by independent agencies revealed significant problems within the hospital. However, the board did not take proactive measures to address the situation, which depicts lack of effective leadership and corporate governance skills.

Corporate governance is critical in directing and controlling an organisation’s operation. Winfield, Bishop, and Porter (2013) cite the existence of weak corporate governance systems as one of the main reasons that explain the failure of most organisations. Kirimi and Barine (2012) define corporate governance as the decision-making process and capability to exercise power on a group of people. The need to reform and improve organisations’ corporate governance systems cannot be ignored if an organisation intends to achieve sustainability (Hill, Jones & Schilling 2014).

The adoption of poor corporate governance and leadership strategies is one of the major hindrances in an organisation’s effectiveness in implementing change. Corporate leaders have a duty to implement effective measures that will foster their organisation’s long-term sustainability by focusing on the mission and vision statements. The Mid Stafford case illustrates extensive failure in the board’s corporate governance processes. The board was mainly concerned with achieving financial bottom line at the expense of other stakeholders. Freeman (2010) contends that corporate governance should focus on developing a strong and positive relationship with diverse categories of stakeholders. Consequently, stakeholders have a fiduciary duty to evaluate an organisation’s responsibility to society (Sparrow & Knight 2006).

In its quest to achieve the Foundation Trust status, Mid Stafford Hospital delegated its managerial responsibility to a board, which was ineffective in reacting to managerial issues that occurred within the hospital. The board ignored the contribution of other leaders within the hospital, which led to the development of a culture of isolation and denial of concerns. Additionally, the board was very lenient in the process of implementing performance standards in addition to overemphasising on financial targets. Subsequently, Mid Stafford Hospital organisational culture was affected adversely. Hellriegel and Slocum (2008, p. 458) affirms that organisational culture ‘reflects the shared and learned values, beliefs, and attitudes of its members’.

Organisational culture is developed over time and it influences an organisation’s performance coupled with fostering employee satisfaction. Nevertheless, it is imperative for organisational leaders to ensure that the organisational culture aligns with changes originating from the internal and external stakeholders in order to minimise a decline in organisational performance (Cumming & Patel 2009). In this case, Mid Stafford Hospital ignored the expectations of its external stakeholders [patients and their families], as evidenced by the decline in the quality of care offered. Despite the board’s knowledge on the poor organisational performance, proactive measures to address the situation were not undertaken. Hellriegel and Slocum (2008) are of the view that it is possible to change an organisation’s culture in order to promote positive performance. However, this goal can only be achieved if effective corporate governance and leadership measures are adopted.

Stakeholder theory

One of the core theories that the Board should have considered in order improve the organisation’s culture, hence its performance is the stakeholder theory, which underscores the importance of managing stakeholder relationships. The stakeholder theory underscores the importance of developing a comprehensive understanding of the environment. The theory emphasises the significance of developing a strong relationship with the various stakeholders. According to Svendsen (2008), organisations are comprised of different groups of stakeholders who are affected by the undertaken activities. Some of the direct organisational stakeholders include customers, residents, employees, suppliers, investors, and shareholders (Botha 2007).

The stakeholder theory accentuates the importance of paying attention to the stakeholders’ wellbeing and interests. Failure to integrate stakeholders in the management process can limit an organisation from attaining its goals and objectives (Phillips 2007). Despite its motivation to attain the Foundation Trust status, Mid Stafford Hospital was affected by its ignorance in delivering service to clients. Moreover, the hospital did not take into account the findings of the performance reports and surveys conducted by various interest groups such as the peer reviews by Cancer Peer Review, HCC, and the Royal College of Surgeons (Public Inquiry 2014).

Svendsen (2008) affirms that the impact of the stakeholder on an organisation is based on three main dimensions, which include their power, legitimacy, and urgency of their assertions. The legitimacy dimension emphasises on the ethical, legal, and moral claims of the stakeholder while the power dimension is concerned with the potential impact of the stakeholder on an organisation. The urgency dimension deals with the degree to which the claim made by the stakeholder requires urgent action. Carroll and Buchholtz (2011) categorise an organisation’s responsibility to its stakeholders based on four main dimensions, which include ethical, legal, economic, and philanthropic. However, the economic dimension is mainly concerned with the shareholders. Therefore, organisations’ boards should not only focus on the financial bottom line in their corporate governance processes (Muswaka 2013). On the contrary, it is essential for organisations to adopt a triple bottom line, viz. economic, environmental, and social dimensions.

Organisations should adopt an inclusive approach in managing their stakeholders. Consequently, they should be accountable to diverse stakeholders within the society and not focus on the shareholders. Therefore, it is imperative for the organisation to address the issues raised by divergent interest groups (Muswaka 2013). In this case, Mid Stafford Hospital ignored all these dimensions despite the reviews made by the various interest groups. Its failure to act on the findings of the surveys explains why the hospital recorded a high mortality rate between 2005 and 2009. Phillips (2007, p. 16) contends that paying attention ‘to the interests and well-being of some non-shareholders is obligatory for more than the prudential and instrumental purposes of wealth maximisation of equity shareholders’. Mid Stafford Hospital Board of Management should have from time to time evaluated the legitimate expectations and interests of the various stakeholders in order to determine how they are aligned with the corporate objectives and hence the organisation’s long-term sustainability (Muswaka 2013).

Organisational leadership

Developing social awareness comprises one of the fundamental aspects in an organisation’s quest to achieve long-term sustainability. Davies (2012) argues that emotional intelligence forms the basis of corporate social awareness. Lack of emotional intelligence limits an organisation’s capacity to develop and sustain a positive corporate reputation. Moreover, Davies (2012) affirms that developing emotional intelligence improves the employees’ productivity and moral tone in executing their duties. Pahl (2008, p. 2) defines emotional intelligence as ‘the ability to perceive, control, and evaluate emotions’. Schein (2010) further argues that is possible for organisations to learn and strengthen the level of emotional intelligence. However, emotional intelligence can only be achieved if the organisational leader is cognitive of the followers’ emotions. Therefore, it is important for organisational leaders to develop an effective internal communication strategy. Sparrow and Knight (2006) assert that it important for organisational leaders to develop a high level of emotional and environmental intelligence in order to be effective in influencing their teams. Furthermore, organisational leaders should foster positive team ethos (Matthews, Zeidner & Roberts 2004).

Organisational leaders should ignite the employees’ passion and drive the development of positive emotions. Pahl (2008) affirms that organisational followers are greatly impacted by the actions of their leaders. Thus, organisational leaders have a great capacity to sway the emotions of their followers. Driving positive emotions leads to resonance, which means that it brings the best out of their followers. Conversely, driving negative emotions leads to dissonance, which limits the employees’ attitude, hence the level of their commitment in executing their roles and responsibilities (Pahl 2008). Organisational leaders should enhance the pride of their followers by developing a motivating working environment (Davies 2012).

Mid Stafford Hospital Board ignored the importance of developing positive emotion intelligence. The board was not concerned with developing an environment conducive for working. Thus, the hospital did not recognise the importance of appreciating the employees’ needs and emotions, which led to the development of a negative organisational culture. The lack of basic care within the hospital’s wards highlights the extent to which the hospital ignored the welfare of its staff. The Public Inquiry (2014) revealed the existence of poor leadership within the organisation. The hospital staff members were not provided with a supportive working environment. On the contrary, the hospital’s internal environment was characterised by an atmosphere of fear. The hospital staffs were not provided with an opportunity to pass their opinion due to bullying and fear by the organisation’s management (Campbell 2013).

The hospital overemphasised financial targets as opposed to the wellbeing of its staff. Subsequently, the organisation’s workforce was characterised by low morale and lack of openness (Public Inquiry 2014). The poor working environment stimulated development of unethical practices amongst the organisation’s workforce, which hindered the development of a patient-centric approach in delivering health care services. For example, the wards were filthy, and thus patients were left in soiled beddings for lengthy duration (Public Inquiry 2014).

Personal development

Every organisation has a duty to ensure that the corporate governance process implemented takes into account the welfare of the internal and external stakeholders. The external stakeholders should be given quality products and services. Conversely, the internal stakeholders [the staff] should be provided with an opportunity to achieve their career goals. One of the strategies that should be incorporated in enhancing the employees’ personal development entails a training program. The program should be developed by taking into account the organisational and employees’ needs. Balachandran and Chandrasekaran (2010) argue that employers are bound by their ethical code and law to provide employees with opportunities to attain their personal career goals. Thus, they should offer employees with on-the-job training opportunities in order to improve their professionalism.

On-the-job training provides employees with an opportunity to discuss the issues facing them at the workplace (Hansen 2010). Furthermore, it is vital for organisational leaders to conduct forums in which ethical issues at the workplace are discussed. For example, they are in a position to cite the workplace behaviours that make them victims of harassment. Such forums provide the organisational leaders with insight on how to enhance ethical code of conduct within the organisation (Balachandran & Chandrasekaran 2010).

Mid Stafford Hospital did not appreciate the importance of assisting its workforce to progress through their career and personal development paths. The hospital made no effort to make budgetary allocation to employee training. Subsequently, the hospital’s workforce was characterised by acute shortage of nursing skills, which led to ineffective service delivery (Public Inquiry 2014). The lack of adequate skills increased a culture of tolerance towards poor standards.

According to Swanepoel (2008), corporate governance processes in organisations should consider incorporating effective decision-making practices. The top-down management style coupled with the bureaucratic leadership style adopted by Mid Stafford hospital limited the organisation’s effectiveness adversely. The management style was not inclusive, which led to a decline in the level of employee motivation. Lack of inclusion in the organisation’s decision-making process limited personal development opportunities amongst employees. Thus, the opportunity to achieve personal development by progressing through their career path was limited significantly.

Ethical culture

The hospital was established with the objective of providing quality health care to the society in Staffordshire. However, its performance between 2005 and 2009 depicts absolute ignorance of ethics. The hospital recorded a high rate of mortality and dissatisfaction between 2005 and 2009. According to Sims (2003), ethical issues in organisations occur at different level, which include the organisational, personal, societal, and international levels. At the personal level, Mid Stafford Hospital experienced ethical issues due to personal decadence. The hospital’s workforce was not concerned with attaining a high level of excellence in executing their duties. Subsequently, they were sloppy in offering care services to patients and dealing with society.

The board did not listen to the employees, which led to conflict of values between the two parties. Moreover, the board’s lack of concern on the employees’ personal development goals instigated loss of morale and loss of ethical sensitivity. Thus, employees were not concerned with informing the board on the negative issues occurring within the institution, which illustrates lack of transparency within the organisation. According to Ferrell, Fraedrich, and Ferrell (2010), organisational leaders should focus on incorporating effective leadership style in order to nurture a strong organisational culture.

One of the most effective leadership styles in fostering a culture of transparency and ethics entails transformational leadership, which is based on a collaborative approach in managing an organisation. Ferrell, Fraedrich, and Ferrell (2010, p. 139) are of the view that transformational leaders ‘are collaborative, which opens the door for transparency through interpersonal exchange’. Adopting transformational leadership style enhances the level of commitment amongst the organisation’s workforce. Some of the approaches that organisational leaders should consider in developing a strong organisational culture entail integrating employees in the decision-making process and establishing effective internal communication (Cooper 2000).

Balanced Board and ethical behaviour

Effective corporate governance is fundamental in an organisation’s pursuit for business excellence. However, achieving this goal is only possible if the management team charged with the responsibility of implementing diverse managerial functions and roles is effective (Fernando 2006). Mid Stafford Hospital’s board was ineffective in executing its managerial functions and roles due to lack of expertise, which led to the development of a culture of poor corporate governance. In order to improve its service delivery, hence the likelihood of achieving the Foundation Trust status, Mid Stafford Hospital corporate governance practices should have been undertaken by a balanced board. Thus, the board should have been comprised of non-executive and executive directors. The non-executive director’s role should have been comprised of independent professionals. The non-executive directors would have ensured independence in the implementation of management practices. According to Campbell and Woodley (2004, p. 29), ‘a board should ensure that there is an appropriate balance of power and authority on the board’. Adopting a balanced board limits the likelihood of dominance by the board in the decision-making process.

Du Plessis, Hargovan, and Bagaric (2005) assert that ethical behaviour amongst the directors comprises the cornerstone for implementing good corporate governance. In order to enhance ethical behaviour amongst the board of directors, it is vital for organisational leaders to formulate an extensive legal and code of conduct. Some of the aspect that should be focused in formulating the code of conduct entails their role in fostering the level of integrity, accountability, and responsibility in executing the roles and responsibilities assigned. Mid Stafford’s board was ineffective in fostering a culture of responsibility, ethics, and accountability amongst its workforce.

Conclusion and recommendations

This case study illustrates significant gaps in the Mid Staffordshire Hospital’s corporate governance and leadership. However, in order to develop a culture of strong corporate governance and effective leadership, it is imperative for the hospital to consider the following aspects.

Inclusiveness – the hospital should adopt stakeholder theory in its management practices. This move will lead to the establishment of a high level of collaboration between the internal and external stakeholders. In addition, it will aid in developing and exploiting intelligence from different stakeholders.

Transformational leadership – the board should consider adopting transformational leadership style in order to ensure that all employees are incorporated in the organisation’s management process. Transformational leadership will enable the hospital to nurture a culture of inclusion, which means that the staff will be integrated into the organisation’s operation. Transformational leadership will enable the organisation to counter the bureaucratic leadership as evidenced in the case study. Moreover, transformational leadership will promote the flow of information within the organisation.

Employee development – the hospital should improve the level of morale and productivity amongst its workforce. One of the strategies that the firm should consider entails integrating a career development program such as employee training. Training will allow employees to develop a high level of satisfaction in executing their goals. Furthermore, employee training will ensure improve the staff’s expertise, hence their effectiveness and commitment in executing their duties.

Balanced board – the hospital should consider improving its governance structure by adopting a balanced board. Thus, the hospital should integrate internal and external parties within the board of directors. This move will enhance independent thought in the hospital’s corporate governance process.

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