Academic journal article Australian Health Review

Improving Human Resource Management in Chinese Healthcare: Identifying the Obstacles to Change

Academic journal article Australian Health Review

Improving Human Resource Management in Chinese Healthcare: Identifying the Obstacles to Change

Article excerpt


Health sector reform in China has led to increasing responsibility for hospital managers in the management of staff, but constraints continue. New personnel reforms offer new opportunities but face a number of difficulties. Drawing on research in Chinese hospitals in 1997 this paper identifies two major obstacles to improved human resource management: wage policy and lack of control by local managers over staffing.


Prior to the 1980s the health system in China was organised on a centralised model, with finance and personnel functions in health care organisations being directly administered by government agencies. The main role for health service executives was to oversee and administer rules and decisions made by others. The situation was complicated by the parallel Communist Party hierarchy, as at the organisational level the Communist Party secretary often had more influence and control over day-to-day decision-making than the named executives of the institution (Pei, 1998).

The move from a planned economy to a socialist market economy and China's entry into the world market led to rapid economic reform that has involved radical change in all sectors, including China's health sector. These changes include the reduction of government financial support for the recurrent costs of health services and the reform of management systems with increased autonomy for managers at the health care facility level. The introduction of the Contract Management Responsibility System (CMRS) has decentralised decision making from government to the health institutions, increasing the operational responsibilities of senior management. The introduction of the Presidential Responsibility System has also placed greater responsibility on the hospital president relative to Party secretary (Liu, Wen and Liu, 1996).

By the mid 1990s hospital managers had greater responsibility for the management of financial resources and some control over the day to day management of staff, however government bureaux still controlled prices, wages and personnel allocation including the recruitment and selection of staff. Health sector reform had meant that managers had increased responsibilities and were expected to manage rather than administer but they were severely constrained by the continuing central regulation of the personnel function. For hospital managers there was a tension between increasing accountability for efficient and effective resource management and lack of control over wages and conditions and labour recruitment and utilisation (Guo, Wang and Zhao 2002).

In 2000 the Chinese government introduced legislation to encourage greater freedom in personnel management and to improve people management through the application of human resource models and better organisational policies and procedures (Ministry of Organisation, Ministry of Personnel and Ministry of Health 2000). Recent evidence suggests that these reforms are meeting some difficulties in implementation due to both local lack of knowledge and skills and wider structural constraints (Guo, Wang and Zhao 2002, Li 2002). In this paper we draw upon a study on Chinese hospital managers carried out in the 1990s to cast light on some of the obstacles to reform. We first outline the development of human resource management in modern China, then describe the research study and discuss the relevance of the findings of the study in the present situation.

Human resource management in China

From the establishment of the People's Republic, hospitals in China were either state-owned or enterpriseowned institutions. Until 1979 government authorities were responsible not only for employment policy and planning in such institutions but also for their implementation. Policies relating to wages, housing, and benefits were all determined centrally - a system known as the 'iron rice bowl". Job allocation was also carried out by central agencies; there was little labour mobility; some areas were overstaffed; and workers had few incentives or rewards (Verma and Tan 1995). …

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