At a time when the fundamental tenets of capitalism are being closely re-examined this question is now more relevant and urgent than ever. So those interested in EB-HR should welcome a unique, real-time experiment that is now underway in the UK’s NHS (National Health Service) because it will inform this debate like no other. Here, a privately-run, profit-making business will be running a ‘free’ health service, in a taxpayer-funded hospital, within a not-for-profit health system. What an unusual mix of systems and ethos? Yet its success could fundamentally re-shape our notions of the most appropriate organisational entity to create the greatest value from the motivation and capabilities of human capital.
At the very least it challenges the simplistic distinction usually made between the profit and not-for-profit sectors; which creates a false dichotomy suggesting very different motives and psychological contracts at play. Such a distorted view was always in danger of reinforcing misguided assumptions about the different levels of performance and value achievable by different types of organisational entity. In private companies the goal of financial rewards is expected to drive high performance while in the governmental/public sector employees are expected to have a vocation and be more publicly spirited: the two do not have to be mutually exclusive.
Recent events have certainly reminded us that whilst the most powerful drivers of ambition and greed can result in very successful and valuable businesses they can equally cause huge failures and misery. But there is also plenty of evidence, certainly in the UK, that public sector management often performs particularly poorly. It is unfortunate therefore that there are so few examples to show us what non-profit organisations are really capable of or whether they can offer a better alternative to compete with the best of the private sector.
If you read the article you will see that reference is made to the ‘John Lewis Model’, which is one of the few examples where a more socially-inclined enterprise has competed directly and successfully with ‘hard-nosed’, market driven, publicly quoted companies for nearly a century. It is based on the very obvious notion that employee ownership (or at least partnership in the John Lewis case) should create an environment where employees have the greatest personal motivation to give of their best. This is why some politicians are heralding it as not only one way forward for companies but as a model for economic progress and social cohesion
Of course the world will be watching this experiment with great interest and, if it succeeds, most management textbooks will have to be re-written to cope with a completely different type of organisational entity, founded on a very sophisticated psychological contract, that can see great good coming out of the combined goals of profit and public service – otherwise known as value to society.
For a more complete answer to my own question see The Value Motive