The healthcare workforce accounts for the largest proportion of all health service costs, and is recognised internationally as playing a key role in providing efficient and effective health services and improving health outcomes. In recent years health policymakers, governments, practitioners and academics have given greater attention to the importance of human resources management (HRM) to health service performance (Bach 2001, Kabene et al 2006). Some of this interest is a reaction to the years of neglect of human resource factors in health sector reform despite the profound effect that such reforms have had on the work of managers and clinicians (Bach 2001, Rigoli & Dussault 2003). Current research suggests that effective HRM strategies are essential in improving health outcomes (Buchan 2004, Kabene et al 2006). Nonetheless, there is no agreement on exactly what effective human resource strategies might look like, and it is easy to ignore the powerful structural constraints and influences in the healthcare sector that detract from such agreement. Of particular note here is the role of government in providing direction to and managing health services. Another factor is the composition of the healthcare workforce itself, organised as it is around tradition-orientated disciplines often described as being rigid and reluctant to change, tribal and self-serving, as well as being strongly unionised with powerful professional associations.

This chapter explores the politics of healthcare and the potential for change. It outlines the nature of the healthcare workforce and identifies key stakeholders and their attitudes to change. The chapter also examines health sector employment relations, outlines the major health sector reform policies impacting on the workforce over the past two decades and charts the reaction of the workforce to those policies and explores the impact of these changes on the organisation including work intensification, workplace change and the greater control and scrutiny of clinicians.

The chapter concludes by arguing that the policies of health sector reform have often exacerbated the underlying problems and issues facing the sector and outlines an approach to creating a sustainable and responsive workforce that engages clinicians and managers in the process of change rather than forcing change on them. Key features of this approach to managing people in healthcare include the importance of leadership at all levels incorporating government, organisations, managers and clinicians; building people management skills; creating collaborative and committed team-based working environments through employee participation and engagement; and understanding and valuing high-performance practices.

Healthcare is a labour-intensive industry with labour costs accounting for between 65 and 80% of total costs. The health workforce in many countries has expanded substantially over the past three decades. It is constituted by different professions and occupational groups each with their own history, culture and specialisations (Duckett 2005, Kabene et al 2006). The main features of professions are the long years of training, specialised knowledge, clinical autonomy and labour mobility (Gunderson 1982:30–31). Health professionals often have a greater allegiance to their profession than to their employers and the professional bodies representing them are often powerful and well organised. They play an important role in the registration and regulation of their members and the definition of standards of practice. They participate both formally in the process of defining legal and administrative standards in healthcare and informally through lobbying governments (Bach 2001, Rigoli & Dussault 2003). Hence the professions are influential within both the industry and the community at large, with nurses and doctors in particular being held in high esteem. At the same time the health professions have a history of competition between each other over resources, prestige and control, and are often described as having a ‘tribal mentality’ (Hunter 1996).

Medical practitioners and medical specialists are generally regarded as the most powerful group in the healthcare sector as they make important resource decisions and largely control the production process. Wilson & Goldschmidt (1995) argue that doctors are trained to be independent, self-reliant and individualistic, to rely on their own judgment and to be accountable to their profession, only sharing their decision-making processes with colleagues in a non-judgmental way. They are at the apex of a hierarchical division of labour in healthcare (Freidson 1970). They decide who enters, who leaves and what treatment they receive. Hence, clinical autonomy, independence and judgment are at the heart of work practice reform in the health sector, although scrutiny of clinical practice is often seen as a challenge to clinicians’ judgment. Yet if employers are to have some control over labour utilisation they must have some control over the production process. This can lead to a direct challenge to the medical profession and to a conflict between allegiance to the profession or to the organisation (Gunderson 1982, Harrison & Pollitt 1994, Hunter 1996). Governments internationally have made various attempts to challenge this autonomy by incorporating clinicians into management and into decision making around the allocation of resources and the management of change, albeit with varying levels of success (Harrison & Pollit 1994, Perkins et al 1997).

In many countries doctors are organised into powerful professions with considerable political clout. While they do not often take industrial action, their strong standing in the community and their control over the production process gives them latent power, which they often threaten to use and occasionally do (Stanton 2006). This means that the actions of doctors can be an obstacle to change. At the micro level, for example, doctors can resist the substitution of labour by blocking the delegation of tasks to other professional groups. At the macro level the organised opposition of doctors in the US through the American Medical Association ‘contributed to the failure of reforms introducing managed care competition in healthcare in 1993’ (Rigoli & Dussault 2003:10).

While doctors are the most powerful group, nursing is one of the largest occupational groups. In Australia nurses make up over two-thirds of the professional workforce allowing a certain amount of power through sheer numbers. They are represented by the Australian Nursing Federation which acts as both a professional association and a trade union with its membership increasing significantly at a time when internationally many trade unions have suffered dramatic membership decline (Bartram et al 2007a). Nurses have demonstrated that they are able and willing when necessary to support their union and exercise their industrial strength to protect their interests and the interests of the patient and the community. Nursing in Australia has had a long and at times bitter history as nurses have had to fight for their professional and tertiary qualification status to improve their wages, conditions and career structures, to enhance their skills and roles and, more recently, to protect hard-won gains over control of some aspects of the work process, in particular nurse–patient ratios (Bartram et al 2007a, McCoppin & Gardner 1994). International evidence shows that nurses join unions not only to improve their pay and conditions but also to protect and advance the profession and their own professional status (Bartram et al 2007a, Breda 1997). As any health minister knows, an industrial dispute with nurses very quickly becomes front-page news and a potential major embarrassment for the government of the day.

Together, nurses and medical practitioners represent the largest groups of professionals in the health sector, although allied health professionals and scientists and non-professional employees are of increasing importance in the hospital environment with influence beyond their numbers. Should medical scientists or radiographers decide to take industrial action, for instance, they can quickly bring surgery in a hospital to a halt and severely disrupt the production process (Bremner & Kelly 2000, Stanton 2006). Experience over the past decade demonstrates that these professional groups will take industrial action if they feel their interests are threatened. Rigoli & Dessault (2003) describe how in a range of countries including Costa Rica, Zambia, the Philippines and Israel, trade unions have strongly opposed health sector reform that threatened labour contracts, conditions of service and the roles of health professionals. The effect of this opposition limited governments in reorganising their public sectors.

Healthcare professionals are very mobile both domestically and internationally. They often migrate to areas where their services will be better compensated both by country migration and by emigration. As the Australian Productivity Commission (2005) notes, a major challenge for the sector is the international labour shortage in many key professional areas including nursing, medical specialists and allied health professionals. Solutions to this problem include encouraging migration from overseas, increasing university places for health professionals and substituting one group of workers with another. However, the solution for one country may have a detrimental effect on others, as developing countries struggle to provide good-quality medical care to their own citizens. Countries such as Ghana, Kenya, South Africa and Zimbabwe have been forced to seek other human resource solutions to counter the emigration of their highly educated and medically trained personnel (Kabene et al 2006). In developing countries such as Nicaragua and Bangladesh health professionals are drawn to the cities where they can find better opportunities for themselves and their families (Kabene et al 2006). This trend is mirrored in Australia where there are acute rural and regional shortages of healthcare staff (Duckett 2005).

Not surprisingly, labour substitution has become increasingly popular with governments as a possible solution to the labour shortage problem. In Australia and the UK, patient care attendants now substitute their labour for some of the more routine work of nurses, allowing nurses to take on some of the work of medical practitioners in a process of ‘skills escalation’, and in the US there is extensive use made of nurses and other health professionals as physicians’ assistants (Duckett 2005). However, in Australia the ‘demarcation’ of professional work is problematic as the issue of skill mix and labour utilisation at the organisational level is highly contested terrain. At the industry level professional associations have largely resisted changes to their work practices as other professions move on to their turf. Medical practitioners resist the development of nurse practitioner roles, and nurses in some states resist the use of patient care attendants.

Finally, the healthcare sector is highly feminised. In Australia, women account for almost 80% of health sector employees. They predominate in nursing and allied health professions and increasingly in general practice, although the higher income medical specialists remain largely male (Duckett 2005). Diallo et al (2003) note that female-dominated occupations such as nursing and midwifery are often not given their proper market value in line with their skill levels as the work is seen as ‘women’s work’ and therefore of lesser value. Also increased participation by women in medicine is often accompanied by different work patterns and evidence shows that women work fewer hours than men and that part-time work is increasing. For example, in Australia in 2001 more than half of nurses worked part time (AIHW 2004) and the level and utilisation of casualisation in the sector has increased (Cregan et al 2003). Allan (1998) argues that casualisation is a managerial tool used to manage workflow. However, Lumley et al (2004) found that nursing shortages allowed nurses to choose to work casually and they did this to take control of their own work schedules, improve their balance of work and family life, and to have less responsibility and hence a more stress-free existence. This was not good news for hospitals that struggle to cover unpopular shifts and to provide acceptable standards of nursing care. In the longer term it might not be good for women either, as evidence shows that female nurses who take time out of the permanent workforce to bring up children fall behind their peers in relation to career development and salary levels (Pudney & Shields 2000).

From the evidence it is clear that workforce flexibility in the healthcare workplace is a major issue to be resolved, yet there is no agreement on what workforce flexibility means in practice, who benefits and how it is to be achieved. In 2004 the Council of Australian Governments commissioned research to examine issues that impact on the ability of the healthcare workforce to ensure ‘the continued delivery of quality healthcare over the next 10 years’ (Productivity Commission 2005:iv). The research undertaken by the Productivity Commission argued that a major objective was to develop ‘a more sustainable and responsive workforce while maintaining a commitment to high-quality and safe health outcomes’. The commission sought views and submissions from a wide range of stakeholders and concluded that while all Australian governments agreed that successful healthcare delivery depended on ‘the commitment, care and professionalism of the Australian healthcare workforce’, a range of challenges faced the sector in reaching this objective. Included were workforce shortages of health professionals particularly in rural and remote areas; an increasing demand for health workforce services; the sheer numbers of institutions, agencies and organisations involved in healthcare delivery; and the difficulties of measuring productivity in such a complex industry. Recommendations to address these challenges ranged from changes in professional training and accreditation to changes to items covered in the Medical Benefits Schedule and better evaluation of service delivery.

In practice, however, healthcare decision making takes place within a complex political arena and many of the commission’s recommendations missed the mark. Healthcare occurs largely in an organisational context and the delivery of healthcare services therefore ‘relies fundamentally upon the human capacity and capabilities of healthcare organisations to train, develop, deploy, manage and engage their workforce effectively’ (Hyde et al 2006:2). This takes place within a highly political and often emotive industrial context and a complex web of powerful key stakeholders whose activities can impact directly on the organisation’s ability to manage its staff effectively. These stakeholders include not only the already-identified professional associations and trade unions but also both federal and state governments that provide funding and policy direction and sometimes direct management and control, as well as vocal consumer organisations and lobby groups. The healthcare workforce is a major focus of change, but attempts to do so often fail because the power of stakeholders is underestimated or ignored. The goals, interests and philosophies of these stakeholders conflict as they struggle over limited resources. While the demand for healthcare services grows, the industry faces increasing resource pressures and the community expects efficient, effective, accountable and quality services.

Healthcare systems in both developed and developing countries have undergone significant reforms as governments search for more efficient and effective service delivery. As Rigoli & Dussault (2003:3) argue, while these reforms were intended to ‘improve the efficiency, equity of access, and quality of public services in general’, in practice much of the focus has been in reducing operating costs and cutting budget deficits. In the search for greater efficiencies, governments introduced a range of policies including decentralising services from central to local level, creating internal purchaser–provider markets, competitive tendering and contracting out of services, introducing performance contracts, pay decentralisation and performance-based pay, downsizing services and re-engineering processes. Yet until recently the impact that such policies had on the work of clinicians was largely ignored.

Understanding the role of government policy in shaping organisational strategy is crucial in the healthcare sector, especially in the employment relations arena, and in particular the way staff are remunerated and rewarded. An emerging issue over the past 25 years has been the level of centralisation of industrial relations and the relationship between pay and performance. In their comparison of the industrial relations systems of the UK, the US and Canada in the early 1980s, Adams et al (1982) concluded that the largely centralised National Health Service (NHS) in the UK was becoming more flexible at a local level and the largely decentralised systems of North America were becoming more centralised. They argued that ‘although collective bargaining in the health sectors started off by being decentralised in North America and centralised in Britain, both were moving towards a similar state of fairly centralised bargaining with accommodation of local needs’ (Adams et al 1982:186). The reason for this streamlining tendency is often the centralised nature of funding. The initiatives of the UK Government in the 1990s to encourage local pay and conditions bargaining to link pay to performance in the NHS failed due partly to the political sensitivity of public services, and also because governments fund public health services and allowed hospitals limited flexibility to fund wage increases. In practice, time and energy were absorbed in negotiations over fairly small amounts of money as managers sought short-term reduction in their overall pay bill by imposing changes in work organisation and labour utilisation (Bach & Winchester 1994, Thornley 1998).

The Australian experience tells a similar story. In Australia the federal government has largely driven both workplace and health sector reform, although it is state governments that have responsibility for hospital services that employ the largest numbers of staff and account for the greatest expenditure (Willis et al 2005). State governments provide policy direction to their healthcare institutions and are the main sources of funding. They set wage policies for their publicly funded services and strive to contain those policies within certain limits (Stanton 2006). Hence, state governments’ decisions about wage policy, funding priorities and employment relations have a direct impact on organisational policy and on hospital employees.

Most Australian state governments pursued similar strategies to improve the productivity and efficiency of their health systems throughout the 1990s. These strategies included budget cutbacks and financial restraint, introducing new forms of funding mostly based on output, such as casemix funding, and outsourcing and privatising services such as catering, cleaning, pathology and radiology (Willis et al 2005). At the same time, both state and federal governments pursued the decentralisation of industrial relations through a move away from centralised award-based industrial arrangements to introducing bargaining at the enterprise level (Stanton 2006). In comparing the introduction and experience of enterprise bargaining in the health sector in New South Wales, Victoria and South Australia, Bray et al (2005) found that despite the different political, legal and historical differences there were similarities. A change of government from Labor to Liberal Coalition in each state led to a period of decentralisation within a rhetoric of increased efficiency and productivity that shifted control of wages and conditions away from state-wide awards based on occupation to local employers. But in reality, although the agreements in each state were signed at the local level, they had been centrally bargained with the active intervention of state governments. The return of the Labor Party to government in each state marked a return to a more open process of centrally agreed but locally implemented enterprise agreements.

Bray et al (2005) suggest that there are three key reasons for centralised bargaining in the healthcare sector: state governments fund healthcare and there are significant cost considerations; trade unions and professional associations have used their industrial strength to keep the bargaining processes centralised; and the fact that the healthcare industry is politically sensitive means governments carry out large-scale reform at their peril. Stanton et al (2004) also found that employer groups favoured some aspects of centralisation, especially of wages, as local employers had few extra resources with which to bargain, and local wage bargaining in a centrally funded system became meaningless. Nonetheless, employers wanted more control over local concerns such as labour utilisation and human resource management initiatives.

It can be argued that any efficiency and productivity gains made during this period were due to the implementation of budget cuts, outsourcing, managerialism and output-based funding rather than bargaining. Indeed, according to some employers the trade unions used the enterprise bargaining process to ‘claw back’ some of the gains that employers had won through these other means. In other words, enterprise bargaining, despite the rhetoric, did not lead to efficiency and productivity gains (Stanton 2006).

The major questions that emerge from this story so far are: What are the actual outcomes from all of this rhetoric and activity? Is the healthcare workforce more efficient and productive? What does this mean for staff at the workplace?

At one level it is possible to argue that there is evidence that the health sector is now more efficient and productive. For example, evidence from Australia shows that by 1996, fewer staff in Australian hospitals were treating significantly more people at a much higher rate of patient turnover and a declining rate of stay (AIHW 1998). In other words, we are getting more from less. However, even the Australian Productivity Commission warns against such simplistic measures of productivity in the healthcare sector arguing that much better data is needed before such claims can be made (Productivity Commission 2006).

Also, debates about efficiency and productivity are generally silent on the outcomes for staff. Harrison & Pollitt (1994) argue that changes in health and industrial relations policy in the UK weakened the ‘market relations’ of health professionals, i.e. their pay and conditions, and at the same time changes in ‘managerial relations’ in the workplace led to an increasing control of the day-to-day work of health professionals and a challenge to their professional autonomy. In Australia, evidence suggests that working conditions have undergone dramatic changes due to a range of factors of which enterprise bargaining was just one. A range of empirical studies link technological changes, rationalisation, budget cuts, outsourcing, privatisation and the introduction of output-based funding to job loss, work intensification and staffing shortages, complaints of greater stress levels and ill health and a decline in staff motivation and morale (Willis et al 2005).

Evidence also shows that health professionals have faced greater managerial control and scrutiny with increased levels of monitoring (White & Bray 2005, Willis & Weekes 2005) and anecdotal evidence suggests that many government departments have developed a tendency to ‘micromanage’ their healthcare agencies under the auspice of improved accountability. Similar stories in the UK have led health professionals to turn to their professions and unions for collective support and resistance (Harrison & Pollitt 1994). The same phenomenon has happened in Australia (Bartram et al 2007b), for example, the growth of the Australian Nursing Federation is due not only to the federation representing its members’ interests by arguing for better wages and conditions, but also through gaining control over workload via nurse–patient ratios and other initiatives. The federation has also appealed to consumers by presenting itself as the defender of the quality of health service delivery.

What this story makes clear is that the strategies of workplace and health sector reform that focus on efficiency and productivity have contributed little to developing a sustainable and responsive workforce. Even if the industry is now more efficient and productive at one level, there has clearly been a downside. The evidence suggests that the international labour shortage problem has been exacerbated and workforce planning and recruitment and retention of all healthcare staff has become a major issue for governments and organisations. In Australia, there is little evidence to demonstrate any major gains in workforce flexibility through these processes, and responsiveness or engagement of professionals and clinicians in positive change. In fact, it has often been the opposite, as professionals turn to their industrial organisations and professions to enable them to dig in and defend the status quo, and in turn the professions appeal to the general community for support against uncaring governments only focused on the bottom line.

The evidence so far suggests that the complex nature of the healthcare industry requires sophisticated and cooperative responses from key stakeholders. Focusing on industrial relations and managerialist solutions to complex problems exacerbates the tensions within the industry and between the key players leading to discord and division. So, is there another way to achieve a sustainable and responsive health workforce?

Internationally, increasing attention has been given to a more systematic approach to HRM as a vehicle to improve organisational performance (Becker & Huselid 2006, Bowen & Ostroff 2004). The link between good people management practice and improved organisational outcomes has been demonstrated in a range of industries. While there is no agreement on exactly what configuration of HRM practices contribute to improved performance, evidence suggests that a range of high performance practices can be identified. These include selective recruitment, appropriate reward and recognition, career and developmental opportunities, teamwork, and employee participation and involvement in decision making (Buchan 2004, Macky & Boxall 2007). Evidence suggests that such practices engage employees and lead to high workforce commitment and hence high performance.

While the measurement of performance in the healthcare industry is contentious (Buchan 2004, Harris et al 2007), studies in the healthcare sector in the US and in the UK have linked such positive people management practices to improved patient mortality in acute hospitals (Aitkin et al 2000, West et al 2002). Such evidence has led the UK government to explore more inclusive approaches to improving efficiency and effectiveness in the healthcare workforce and more attention has been given in exploring the potential of HRM to engage the workforce in change processes. The NHS’s ‘HR in the NHS Plan’ (DoH 2002) aims to do this to ‘achieve more people, working differently’. Its key objectives include making the NHS a model employer, ensuring that the NHS provides a model career path through offering a skills escalator, improving staff morale and building people management skills. A range of initiatives have been introduced including establishing the Leadership Centre and the NHS Institute for Innovation and Improvement, as well as developing performance standards for HRM and pay modernisation. All of these initiatives demonstrate that governments do have a role in putting people management centre stage and creating the conditions for organisational development in this key area.

In Australia, on the other hand, there has not been the same degree of focus on the promotion of improved people management practices as a solution to complex workforce problems. Stanton et al (2004) examined the institutional context of people management practices in the Victorian healthcare sector by interviewing trade union and government officials and employers, and found a lack of understanding of the potential of HRM in this people-rich, knowledge-based service industry. HRM was seen as an administrative function with no measurable links to improved care delivery and organisational performance. Importantly, they found a general lack of interest or ability to explore the value of HRM despite evidence of labour shortages and high labour turnover in the sector. Government interviewees saw HR as the responsibility of the hospitals and employers worried that putting more resources into people management would be seen by the community as taking resources away from patient care. Employers also saw no benefit in encouraging government to follow the UK approach and drive HR in their industry, fearing that this would lead to increased micromanagement by government departments and unrealistic performance contracts.

Yet despite this negativity, evidence demonstrates that HR can play a crucial role in organisational performance in healthcare and more managers and practitioners are becoming aware of this potential. Organisational research points to four critical success factors in HR-led reform that create the conditions for successfully managing clinicians and improved outcomes. These are:

Finally, an important but contentious area is the understanding, measurement and evaluation of HRM outcomes and the links to organisational performance. Performance management is often seen in a negative light as it appears to suggest monitoring and control and sometimes even punishment. Yet the evidence shows that organisations that collect, monitor, evaluate and feed back their performance data are able to identify and reward areas of good practice and fix up areas that need attention. The first issue here is that organisations actually do need to collect and utilise the data. Bartram et al (2007a) found that Victorian hospitals primarily monitored financial and volume indicators with little evidence of effective systems in place to benchmark or integrate performance management of employees. They also found a lack of consistency in measuring HRM outcomes such as labour turnover, sickness and absenteeism making it difficult to benchmark some items across the sector. However, they also discovered that a number of organisations did measure their HR outcomes and in a number of these organisations there were positive associations between espoused HRM practices and HRM outcomes (Bartram et al 2007a). In other words, organisations that claimed to have good people management practices and collected and analysed the indicators that proved this, such as lower rates of turnover, low staff vacancy levels, and low rates of sickness, absenteeism, accidents, industrial disputes and grievances, were able to demonstrate the relevance of HR and its contribution to their overall organisational outcomes.

The second issue here is ownership of the data and senior managers taking the lead rather than government forcing measurement on them. For example in the UK a focus on performance rating for HRM in the NHS, while intended to increase public awareness of quality of healthcare provision and improve standards of performance, was perceived by HR managers as a burden rather than a measure of good organisational performance. Givan (2005) found that meaningful comparison of performance depends on the availability of accurate data collected in a fair and transparent way and in the NHS the HR directors had no confidence in the quality of the data used to create the ratings and only trusted the results when they had been consulted directly rather than through a top-down collection of performance data. Managers felt that government was not responsive to their concerns and there was a general lack of consultation. HR managers wanted to have some ownership of the process at the organisational level. As with clinicians, these findings suggest that managers prefer to be included in decision making rather than having standards imposed upon them and then monitored for compliance. However, collecting such data is crucial if organisations are to know whether their people management practices are working well.

The third issue is valuing the data and recognising the contribution that good people management practices can make to organisational outcomes. The performance management system in the NHS has since been superseded by the ‘Annual Health Check’ comprising standards that include HR indicators. These standards measure hospital performance on a range of issues including ‘the extent to which they support and recognise their staff contribution via personal development plans, appropriate recruitment, mandatory training and further professional development’ (Harris et al 2007:453). However, the thrust of the new approach is to encourage local autonomy and flexibility, recognising the value of tailoring HR practices to suit local circumstances. All the evidence suggests that for this approach to be successful, leadership and commitment at every level is essential, and leaders need the skills and abilities to engage with their staff in order to encourage attitudes and patterns of behaviour that lead to excellent patient care.

The researchers also found that the role of managers at all levels of the organisational hierarchy in operationalising HRM was crucial. The further away managers were from the strategy makers the more challenging it was to keep them informed, engaged and empowered, particularly in large and complex organisations. One of the high-performing hospitals put emphasis on resourcing lower level managers in time, knowledge and information in order to effectively and consistently translate strategy into practice. The executive team in this organisation recognised that information flows between and across hierarchical levels is imperative to ensure that silos, blockages and information overload do not occur. Such blockages impact on validity, consensus and consistency, and the larger and more complex the organisation the more difficult this is to achieve. Overall the message from these case studies was clear: good people management practices that improve organisational effectiveness can only be enacted with strong leadership and support from the top.

This chapter has identified some of the key challenges facing the Australian healthcare sector if it is to develop a flexible and responsive workforce that provides high-quality healthcare services. These challenges concern engaging with the size, cost, strength and disparate nature of the workforce; the powerful stakeholder presence of government; and the political nature of the industry. In this context, there are difficulties in trying to re-direct management practice in organisations that are inextricably linked to a wider complex web of regulations, relationships and restrictions. These structural constraints impinge directly on management practice. While the evidence shows that the institutional framework can drive change, it is not always in the right direction and the impact on the organisation is varied, particularly where key stakeholders resist change.

The way of the future must surely be to engage stakeholders, specifically clinicians and managers at every level. While not always so easy at the macro level, there are clearly possibilities to do this strategically at the local level through positive HRM systems that illuminate, reward and encourage behaviour that leads to high-quality and responsive patient care. Organisational research points to the fact that action at the local level is more likely to succeed. However, to carry out policies that focus on long-term strategic development and staff engagement requires not only managerial commitment but also time, ability and resources that enable senior managers to focus on the future rather than just reacting to present circumstance. In reality, healthcare executives spend much of their time reacting to the vagaries of government policy and the responses of key stakeholders than in strategic organisational management. A key challenge for government is to create a set of conditions that encourage and nurture new initiatives that allow healthcare organisations to become truly high performing.