The focus of this case is on the impact of private equity (PE) interventions on human resource management in a hospital. In its simplest form, private equity firms buy a profitable company and sell it three to seven years later for more than it paid. The gain is the sum of the capital gain on resale and the operating profit realized meanwhile (Folkman et al., 2009; Robbins et al., 2008).

Such an intervention constitutes an important organizational event that usually heralds major organizational transformations (Boselie and Koene, 2010), including reorganizations, increased job insecurity, unemployment and significant effects on employee outcomes such as organizational commitment, employee trust in top management and job stress. A PE intervention is closely related to the investor buy-out, the later often representing single investors with substantial personal investments (Boselie and Koene, 2010). There is a substantial body of literature on PE interventions in the private sector (Wright and Bruining, 2008). However, little is known about the impact of PE in the public sector or for the semi-public organizations that make up the bulk of the public sphere in Western countries (Kickert, 2001). As private organizations performing public functions, they are positioned somewhere between a pure government agency and a commercial firm (Rainey, 1991). Given that PEFs are known for their aggressive, commercial operations, this trend raises questions about the effects on public service workers, because public organizations differ in some aspects from the private sector. First, public sector organizations are in many cases partly financed by public funds. Second, services delivered by these organizations are seen as essential services, which have to be highly accessible and transparent. Finally, public service workers are often seen as being motivated by contributing to society and not by financial aspects (Vandenabeele, 2007 The central question in this case study is therefore:

What is the impact of PE interventions on human resource management (HRM) in public organizations?

The PE intervention is aimed at increasing organizational performance. But it is not always clear how this is achieved, who will be involved in the process, how PE will affect human resource practices (for example recruitment and selection, employee development and compensation) and whether increasing performance also includes increasing employee well-being and societal well-being. The last goal (societal wellbeing)

is in particular relevant for organizations operating in the public domain. The aim of this case is to provide insights on both content and process through a case study analysis of a public organization on the impact of private equity on HRM. Sub-questions that are linked to the central research question are:

● What is the actual involvement and participation in decision making of different stakeholders such as works councils?

● What is the potential impact of private equity on HRM practices?

● What is the potential impact of private equity on HRM outcomes?

The case starts with the context, then, PE and HRM are further defined. Next, the central questions will be elaborated by describing the case: the PE involvement in a Dutch hospital and its HRM effects. Finally, a conclusion and the lessons learned are formulated............

Questions

1 What are the advantages and disadvantages of works council and client council involvement at an early stage of a private equity intervention from the top management perspective and from the individual employee perspective?
2 What kind of human resource policies and practices can be applied to retain valuable employees (highly qualified and motivated workers) during a process of a major organizational change? Are there any differences in strategies between public and private organizations?
3 Why is it important that the two board members actively participate in a road show in which they personally explain the private equity situation?
4 What is the impact of a General Electric inspired performance management system on professionals (nurses and medical specialists) in a hospital?
5 How does the new performance management affect organizational commitment, occupational commitment and team commitment of employees within the hospital?
6 What is the impact of outsourcing disciplines on employees who are being outsourced and employees who may stay?
7 In order to attract and retain talented workers, organizations need to build, strengthen and maintain their corporate identity. A concept that refers to this phenomenon is ‘employment branding’. Given the background of the PE intervention in the Rembrandt van Rijn hospital, what human resource management strategy and policy can be developed to contribute to the ‘employment branding’ of the organization?
8 What kind of qualities and competencies do HR professionals need for adding value to the organizational change process caused by a private equity intervention?
9 What kind of concrete HR practices can be applied to minimize the negative effects on a private equity intervention on employee attitudes and perceptions? Also explain why?