The role of supervisory boards
in German healthcare:
Study 2016  DHR NEUMANN  Patrick A. Haberland
Photo Source: © mariakraynova - fotolia.com
An empirical study
Summary
The Study
Participants
Interview Method
• 26 supervisory
councils and
244 people
contacted
• Focus:
university
hospitals &
private clinics
Study Focus
• in-depth
interviews
• semi-structured
interview guide
(1) Management intensity vs.
controlling intensity
(2) Staffing processes
(3) Relation to
organisational leadership
(4) Acceptance and perception
within the organization
The Results
1 Management intensity vs.
controlling intensity
The role of the supervisory
board is clearly defined; the
supervisory board plays a
decisive role in special or
critical situations with the
organisational leadership
holding the decisive role in
daily business with some coinvolvement from the
supervisory board.
2 Staffing processes
The supervisory board is to
be involved in decisions of
fundamental importance –
this regularly happens when
top positions are to be filled
particularly in discussions
concerning candidates,
budgets and selection
interviews
3 Relation to organisational
leadership
... Is characterized by
unbureaucratic cooperation
and mutual trust.
In short: The board does the
work - the Supervisory Board
leads the way .
4 Acceptance and perception
within the organization
The visibility of the
supervisory board among the
workforce is fairly slight, but
positively viewed nonetheless
Content
1
Starting Point: Supervisory Boards in the Spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Supervisory Boards in the Spotlight
Financial, strategic and controlling competences for supervisory and advisory functions in the
spotlight
Questionable business practices, high staff
fluctuation and management chaos typify the
healthcare provider’s everyday routine. New
disclosures reveal that the supervisory board needs
to act. By Melanie Bergermann.
Sources: Frankfurter Neue Presse (20.02.2016); Solinger Tageblatt (21.01.2016); KU Gesundheitsmanagement 1/2014; Wirtschaftswoche (19.02.2013)
Supervisory Boards in the Spotlight
In publicly maintained hospitals politics plays an important role in the supervisory boards – this has
an impact on what they seek to influence
Composition of supervisory boards in German hospitals according to form of maintenance (2009): 1
Financial
Experts
21%
Politicians
Municipal
hospitals
31%
90
80
8.03
2.14
70
11.49
13.99
60
46%
41%
Non-profit
hospitals
Private
hospitals
11%
9.09
50
45.66
20.89
40
41.34
30
20%
10.97
20
10
31.09
20.42
14.97
0.73
0
Non-profit hospitals
Clergy
Source: 1 ) Statista ( 2015), University of Cologne
10.85
Politicians
Municipal hospitals
Financial experts
Private hospitals
Medical/healthcare personnel
Doctors
Supervisory Boards in the Spotlight
In publicly maintained hospitals politics plays an important role in the supervisory boards – this has
an impact on what they seek to influence
Influence of the supervisory board on the strategic goal-planning of the hospital concerned:2
Top 3:
Organisation objectives
Hospitals in total
Public
Non-profit
2
Patient-oriented objectives
4.0
3.9
Infrastructure objectives
3.9
3.9
4.0
Quality-oriented objectives
3.9
3.8
4.0
Market-segment objectives
3.8
3.5
4.0
Profitability objectives
3.8
3.5
4.1
Provision objectives
3.8
4.1
Creditworthiness objectives
3.7
3.4
Occupational-political objectives
3.7
3.9
Market-position objectives
3.6
3.5
3.8
Employee-oriented objectives
3.6
3.4
3.8
Partner-orientated objectives
3.6
3.4
3.7
(2) Patient-oriented objectives
Prestige objectives
3.3
3.2
3.4
(3) Profitability objectives
Innovation-oriented objectives
3.3
3.1
3.5
Social objectives
3.0
3.0
2.9
Public Hospitals
(1) Supply objectives
(2) Patient-oriented objectives
(3) Occupational-political objectives
Non-profit Hospitals
(1) Credit-quality objectives
1
4.1
3
3.4
4.1
3
2
1
3.5
Median value on a scale ranging from 1 = not at all, 2 = slightly, 3 = averagely, 4 = fairly, 5 = very (important)
Sources: 1) Statista (2015), Uni Köln 2) Blum, Büchner, Hinz, & Schreyögg (2013)
(N = 214 hospitals, without university clinics)
Supervisory Boards in the Spotlight
The duties of supervisory boards in hospitals constitute a special challenge because of the expertise
required
Supervision of management
 Supervision of the attainment of objectives and of management‘s action/non-action, especially in relation to important strategic
and organisational decisions.
 Supervision of business activities which require socially contractual agreement, as a rule mainly the hiring (and dismissal) of
leading medical staff.
 While according to law supervisory responsibility lies with the supervisory board together with the shareholders/ business
associates, in practice it is often delegated wholly to the supervisory board.
• Municipal authorities generally require a delegation of this kind to be contained in the municipal regulations
 Providing future-oriented advice to management concerning long-term strategic social developments is also generally recognised
today as one of the supervisory board’s functions.
 Requires expertise in medicine and the medical branch.
 Supervising the balance between profit-orientation and the quality of medical provision constitutes a special challenge.
Social representation vis-à-vis management
 Particularly in connection with negotiating employment contracts and related topics.
 Duty to protect the interests of shareholders/business associates in cases of management‘s neglect of duty.
 In this function especially the supervisory board member‘s duty is primarily to society as a whole – competing interests must
therefore be disregarded.
 The overriding obligation to serve company interests can form a major challenge for supervisory board members with a
background in municipal politics.
Examination of annual accounts
 Supervisory board members are legally required to have enough expertise to be able to form an independent judgement of
financial statements – diverse particulars in hospital accounting regulations make this very difficult.
 Requires expert knowledge of hospital accounting procedures.
Supervisory Boards in the Spotlight
As well as the skills needed in other professional areas, supervisory boards in healthcare must also
have the ability to assess the benefits for patients
Quick checks often used to test the skills possessed by
supervisory boards in other professional areas1
Extra challenge in healthcare: patient benefit
must be kept in mind (Klimpe et al., 2013)
“It is only a question of time before the supervisory
boards of municipal, non-profit and university
clinics are also led by suitable independent,
entrepreneurially and strategically talented doctors.
This should serve to enhance patient benefit, which
C. Guth (Artemed Group) and M. Porter (Harvard
University) define as the chief aim of the healthcare
business – the goal is more effective treatment as an
improved outcome for the patient at optimum cost.”2
Sources: 1) Stetenfeld & Oberelbert (2014) 2) Klimpe, Miekley, von Blanquet, Ekkernkamp (2013), KU Gesundheitsmanagement
Content
1
Situation: Supervisory Board members in the spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Methodology and Participants
Starting point and aims
 In theory supervisory boards in large clinics perform a central function as an influencing and controlling body. The aim of this
study is to develop a better understanding of how the supervisory boards interpret this role and of what relevance they have in
determining hospital business affairs.
 The following questions will be focused on:
 Is the supervisory board, in terms of its daily business and its own understanding of its role, primarily a management or a
controlling body?
 Which is more influential in staffing decisions: the supervisory board or organisational leadership?
 What is the relationship between organisational leadership and the supervisory boards?
 How is the supervisory board perceived by the workforce and how far does it represent the workforce‘s interests?
The Study
Methods
 The study is based on 26 partly
standardised interviews with
experts drawn from supervisory
boards at the participating clinics.
 To understand the role and
significance of the supervisory
boards for the clinics‘ success a
software-supported evaluation of
the data was carried out using
MAXQDA.
Interview Technique
 All interviews were carried out
personally by Patrick A. Haberland,
an expert in the area of personnel
and management processes in
healthcare
 The methods used meant that
special importance was placed on
protecting the participants‘
anonymity.
Structure of participants
 The supervisory board members
interviewed were composed as
follows:
 University hospitals: 70%
 Municipal hospitals: 10%
 Social organisations: 20%
 The participants have been active
in this position for 10 years on
average
Methodology and Participants
The partly structured interviews were based on four building blocks in order to clarify the relation of
the supervisory boards to the various stakeholders
Building blocks
Main tasks/ roles
of the SB
Main tasks in
filling top
positions
Management role
Tasks involving
vs. controlling
most use of time
role
Involvement in
personnel
selection and
budgeting
Role compared to
that of
organisational
leadership
Figurative
Frequency of
representation of
Suggesting
institutionalised
SB/ leadership
topics/ criticisms
meetings
relation
Frequency/ end Topics important
of contact to staff
to staff
Relationship to
staff
1
Relation of management
intensity to controlling
intensity
2
Staffing processes
3
Relation to organisational
leadership
4
Acceptance and perception
within the organisation
Content
1
Situation: Supervisory Board members in the spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Management Intensity v Control Intensity
Supervisory boards spend a lot of their time on strategic topics, although they do not view these as
their central task
Which tasks do you regard as most important for the
supervisory board?
Regular reports
 Receiving annual
and quarterly reports
 Financial and
investment planning
Crises of
every kind
relevant to the
public
Building
Personnel
Recruiting/
dismissing
leading staff
Strategy
Management vs. Controlling body
“Checks and
supervison”
“active form
giving
role”
Is the role of supervisory boards in healthcare clearly
defined?
yes
Which topics take up most of your time?
Strategy
long-term 5-10
year horizon
Regular
meetings with
organisational
leadership
Personnel
decisions
In phases
“supportive dialogue“
“Pure
controlling
body”
“both”
Major
investments
incl. new
building projects
communication
with
shareholders/
business
associates
Management Intensity v Control Intensity
The supervisory board plays a decisive role only in special situations, but is also heavily involved in
normal daily business
Four role typologies
22%
Supervisory board as decisive
Synthesis of supervisory board
and organisational leadership
28%
low
Management intensity
of the supervisory board
high
50%
Potential loser
Organisational leadership as
decisive
low
High
In normal cases
In crises/
special situations
Management intensity
of organisational leadership
Content
1
Situation: Supervisory Board members in the spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Staff Processes
The supervisory board is to be involved in decisions of fundamental importance – this regularly
happens when top positions are to be filled
Organisational leadership and SB have similar priorities
concerning appointments to top positions
As a rule organisational leadership makes a suggestion,
then the appointment is discussed together.
…
Social skills
Identification with
organisational
philosophy and
leadership
Communicative
ability
Requirements
candidates
must fulfil
Professional
expertise
Reputation/
references
Leadership
experience and
style
Identification
of suitable candidates
Preselection by organisational
leadership – discussion with SB
Negotiations with preferred
candidates (SB mainly involved in
budgetary decisions)
Appointment
A large number of the participating supervisory boards state that they are involved in appointment
procedures for top positions, particularly in discussions concerning candidates, budgets and selection
interviews – however, some interview partners criticise the SB‘s restricted scope for decision-making.
Content
1
Situation: Supervisory Board members in the spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Relation to organisational leadership
The supervisory board’s relation to organisational leadership is characterised by unbureaucratic
cooperation and mutual trust
Frequency of meetings
 Supervisory boards meet with organisational leadership in general at least once per
quarter; given the background of quarterly reporting obligations this seems sensible.
Frequency of meetings (N=6)
 Sometimes the supervisory boards meet only on alternate occasions.
 As a rule supervisory boards have unbureaucratic access to organisational leadership
for further-reaching communication and meetings in connection with special projects
and critical situations.
 The topics discussed relate to current projects and activities and overlap with the focus
points brought to light in building block 1.
1 x month
1 x quarter
3 x year
 All supervisory boards proactively put forward topics for discussion.
Public criticism
 The readiness to criticise the board of directors publicly is limited to extreme situations which involve a major dereliction of duty
and point to character defects (e.g. misappropriation). In part public criticism is regarded as fundamentally unthinkable.
 To avoid damage to the organisation‘s reputation, the readiness to express public criticism is greater in times of crisis when
media interest is high and when such a reaction is socially expected.
 In general public criticism is regarded as an “ultima ratio” for situations in which internal procedures have failed to bring success.
Communication channels
To the board of directors:
To organisation employees:
 Institutionalised meetings.
 Annual newsletters etc.
 “Short internal route” – “Pick up the phone”
 Mainly concerning the status quo and ethical principles.
 Direct, informal contact is rarer.
Relation to organisational leadership
The cooperation between the board of directors and the supervisory board can be illustrated as below:
the board of directors does the work – the supervisory board indicates the direction
Supervisory board
Photo source: http://1080.plus/K+K-Cup_2015_Hindernisfahren_by_Westf%C3%A4lische_Nachrichten/tIq9HetlJKs.video
Board of directors
Relation to organisational leadership
Cooperation between the board of directors and the supervisory board: the board of directors does
the work and the supervisory board indicates the direction
“With an eye on the task”
How might the supervisory boards
describe their relation to organisational
leadership?
 The cooperation is generally described
“Occasional
intervention”
“Communicative”
“Unanimous on the question”
“Fundamental trust”
as characterised by trust, solutionoriented and mutually supportive.
 The board of directors provides the
energy, the supervisory board acts as a
direction-giver.
Conclusion
 Public criticism is taboo.
 In general cooperation is effective and
characterised by trust.
 From the viewpoint of the supervisory
boards there are mostly no tensions
vis-à-vis organisational leadership,
even if this might be expected in cases
where the supervisory boards intervene
strongly.
Photo source: http://1080.plus/K+K-Cup_2015_Hindernisfahren_by_Westf%C3%A4lische_Nachrichten/tIq9HetlJKs.video
Content
1
Situation: Supervisory Board members in the spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Acceptance and perception within the organisation
The visibility of the supervisory board among the workforce is fairly slight, but positively viewed
nonetheless
Do employees‘ complaints get through to you?
 In general employees rarely contact the supervisory boards with complaints; this happens on average once or twice per year.
 Occasionally complaints by patients also reach the supervisory boards.
 Representatives of public institutions who are members of supervisory boards are perceived more in terms of their public
capacity with regard to their regulative role and less in terms of their function as supervisory board members.
 In some cases the supervisory boards receive reports of complaints made by employees and patients which have been addressed
to the board of directors.
 Direct contact to employees is very rare and is not viewed as the task of the supervisory board.
Topics
 Hurt feelings and other such interpersonal problems on a managerial level.
 “Whistle-blower“ topics (especially lapses of hygiene).
 Complaints about safety at the workplace or salary contracts are topics which lower levels of the workforce also address to the
supervisory boards; this only occurs in rare and unusual cases (e.g. departmental spin-off).
 University appointment procedures.
 The establishment of binding organisational values and guidelines is also a topic for the supervisory boards, which they in part actively pursue
in the employees’ interests, although they regard the personnel departments as primarily responsible for such matters.
Conclusion
 In general the supervisory boards do not regard themselves as representatives of the employees with regard to organisational
operations.
 In normal daily business they are concerned to shape structures in such a way that problems or complaints can already be dealt
with on lower hierarchical levels: this is conducive to a good working atmosphere.
 Only in special situations do they take direct steps to work actively and constructively on behalf of employees‘ interests.
Content
1
Situation: Supervisory Board members in the spotlight
2
Scientific investigation: Methodology and participants
3
Part 1: Relation of management intensity / control intensity
4
Part 2: Staff processes
5
Part 3: Relation to organisational leadership
6
Part 4: Acceptance and perception within the organization
7
Conclusion: Heterogeneous picture of supervisory boards in the
area of healthcare
Heterogeneous picture of supervisory boards in Germany’s healthcare
While the role of the supervisory board is clearly defined, in practice the level of professionalism of
individual supervisory boards is very heterogeneous
Topic
1
Strategic role
(“Manager”)
2
Relation to
organisational
leadership
3
Relation to
workforce
Field of action
 The greater the SB‘s influence on setting strategic
objectives, the better the business results and productivity
in the hospitals concerned 1
 However, for this to happen the SB must possess the
relevant expertise and skills → desire for more
management skills and analytical competence
 Improved cooperation between organisational leadership
and SB (e.g. open communication, joint involvement in
decision-making) also has a positive influence on business
results and productivity 1
 To this end a culture of honest and respectful
communication needs to be developed – formal
agreements should not be passed on in an informal way
 Employees‘ representatives on the SB have the political
obligation to report on their activities and to answer
questions and criticisms from those who have delegated
this function to them
 Most supervisory boards perform this function, but in an
uncoordinated, only slightly institutionalised manner
Possibillities of action
A consequential strategic orientation
on the part of the SB requires
expertise: clear skills profiles and
further training for SB-members;
evaluation of the SB from outside
Professional cooperation analysis by
external third parties in order to
identify central fields of action;
ongoing process of learning views
and opinions
Raising visibility of the SB among
employees (e.g. via regular lunch
meetings, newsletters); strategic and
solution-oriented use of employee
questionnaires
Sources: 1) Büchner, Schreyögg, & Schultz (2013)
Heterogeneous picture of supervisory boards in Germany’s healthcare
Three areas which can be tackled using focused measures – strengthening the role of supervisory
boards as responsible agents, not merely figureheads
Format
Goal
Benefit
Skills profiles
and further
training
 Optimised membership of SB
 Heightened awareness and provision
of relevant skills (e.g. in financing,
strategy, controlling etc.)
 Improved output and productivity
 Reduced risk of wrong decisions
Analysis of
cooperation
 Enabling a change of perspective from
“describing a problem“ to “finding a
solution“
 Recognition of consensus and
disagreement
 Realising steps towards finding a
solution in possible conflict situations
Visibility of the
SB among the
workforce
 Transparency about the SB‘s work
 Discovering important problem areas
among the workforce
 Adequate performance of the SB‘s
function as a representative of the
workforce
 Widely accepted (personnel) solutions
1
2
3
Your Contact Partner
Patrick A. Haberland
Patrick Haberland serves as partner, based in the DHR International’s Frankfurt office.
Patrick has worked extensively in life sciences executive search as well as within the
healthcare industry, and he has an in-depth understanding of business dynamics and
executive talent demands within this sector.
Prior to joining DHR, Patrick Haberland was a partner with CTPartners NEUMANN. Patrick
joined CTPartners in 2014, when the firm merged with Neumann Partners. Based in
Heidelberg, he was a member of the firm’s Global Life Sciences Practice and is also
experienced within the automotive/industry sectors.
Kontakt
DHR International Neumann
Deutschland GmbH
Friedrich-Ebert-Anlage 36
60325 Frankfurt am Main
+49 (69) 244.333.135
Previously, Patrick was a partner in Neumann’s Heidelberg office. In addition to his
industry experience, he has an extensive background in healthcare/life science, especially
in hospital, executive search as well as management audits and assessments, within the
European market.
Prior to joining Neumann, Patrick served successfully as a principal at Boyden. He started
his career in executive search and leadership consulting at a German executive search
company, where he was a senior consultant and directed hospital and healthcare sector
activities. He later served as an advisor at Ray & Berndtson CEE, working in the
pharmaceuticals and other life sciences industries.
[email protected]
www.dhrinternational.com
Patrick began his career as an Intelligence Corps Officer in the German Army. Before
moving into executive search, he held a management role with a German hospital group.