MGMT 655: Survey of Management

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1 MGMT 655: Survey of Management FINAL PAPER: PAUL LEVY Ivan Alexander Estela Gonzalez Soo Jeoung Han Scott Morgan Avinash Naganathan Eric Puls Qian Shao

2 1. Introduction This paper provides an analysis on Paul Levy's managerial performance during his time serving as the president and Chief Executive Officer (CEO) of the Beth Israel Deaconess Medical Center (BIDMC). Several main aspects of his management approach will be highlighted and related to some of the key course components that have been discussed throughout the semester. Levy's performances in the areas of leadership, motivation, and teamwork provide a wide array of examples and discussion materials that are strongly correlated within the unit of study in this management course. These aspects will be discussed in detail throughout the following sections accompanied by examples and arguments that focus on either the strengths or weaknesses of the actions that have been taken to accomplish the goal of ensuring the success and recovery of the BIDMC. 2. Leadership There were several managerial skills Paul Levy utilized when he was appointed as the president and CEO of the BIDMC which contributed to his success. Employing good leadership was a necessity due to the many problems between the different administrators, board members, and employees. In addition, he needed to garner various forms of power to be able to effectively perform his duties, which was an area that was overlooked by his predecessors. For instance, Mr. Levy already had personal power to bring to the job due to his multiple degrees from the Massachusetts Institute of Technology (MIT), and his work experiences with other difficult projects such as the cleanup of Boston Harbor. He also maintained a position as executive dean of administration at Harvard Medical School while serving on the selection panel for the very position that was eventually bestowed upon him.

3 Upon becoming CEO of the BIDMC, he gained the positional power necessary to truly bring about solutions to the problems faced by the medical group, and he had legitimate power due to his formal position as the head of the organization which allowed him to make executive decisions and strategies that would ensure a smooth operation of the medical center. Additionally, he had the reward power to offer praise and promotions, and at the same time, the coercive power which allowed him to punish individuals who did not perform up to the set expectations. For example, his ownership of power was clearly shown when he removed the Chief Operating Officer (COO) and the Chief of Orthopedics for not performing their jobs adequately. He felt that both of their performances were hindering the advancement of the organizational goals, specifically due to lack of clear channel of communications and conflicting managerial styles, and it was therefore necessary to remove them. However, he also showed a great deal of respect for the individuals by allowing both the COO and the chief of orthopedics to decide how they would want to make their announcements regarding the firing. Exercising his authority in a manner that still preserved the dignity of the people involved indicates Levy s respect towards those with whom he worked. Additionally, Levy showed referent power through his interactions with the staff of the BIDMC. When he spoke to the search coordinators, he set specific conditions for his hiring that had to be met which included: the removal of the board from the day-to-day activities of the hospital, a reduction in size of the board, and a start date in early January. Setting these requirements allowed Levy to acquire respect from the board by proving that he was a leader who was willing to earn peoples respect, be open, democratic, team-oriented, and act in the best interest of the hospital. A great example of this particular quality occurred when he asked the administrators, chiefs, and thousands of employees to sign off on the new plan before approaching the board of

4 directors with it. This demonstrates the leadership skills he exercised by being a considerationtype leader and building a sense of unity to improve the condition at BIDMC. The actions he made at the beginning of his tenure were critical in establishing his presence as a leader in the hospital. He explained the possibility of selling the hospital to a for-profit company and mentioned that this idea was temporarily removed from the table when he agreed to take the CEO position. This decision produced a positive effect among the staff and administrators. In addition, he released the Hunter Group s report on the state of the hospital to all of the employees, but rejected some of the report s recommendations which he felt did not meet the mission of the BIDMC. It would have been easier for Levy to wait and assume the CEO position after the report came out and to simply accept all of their rigorous suggestions for fixing the hospital, even if it compromised the primary mission of the BIDMC. Instead, Paul Levy chose to start before the report was released and create a strategic plan with the other hospital administrators to find a solution for BIDMC s problems. Moreover, he utilized the Hunter report and improved upon their suggested plan, showing that he was a leader that was capable of initiating operational strategies while considering various inputs from other sources. Levy personally helped develop the recovery plan and then fully released it to all the personnel to ask for feedback while being honest about the layoffs that would be occurring in the near future. By creating and executing a goal-oriented, deadline-driven, and potentially successful recovery plan, he was able to gain the respect and trust of the board, chiefs, and employees of the hospital, which were very important factors that contributed to his overall success during his time as the CEO of the BIDMC. He started out with the clear goal of keeping BIDMC as a successful nonprofit and independent hospital that cares for its patients. Subsequently, he began to forge a more effective working relationship between the administrators, the hospital chiefs, and the

5 various employees working for the hospitals under the CareGroup umbrella. These actions clearly illustrate his effectiveness and wide-ranging abilities as the leader of the BIDMC. 3. Motivation Paul Levy was also effective at motivating the employees at BIDMC to support him despite repeated failures of the previous management to improve the hospital s financial and administrative environment. Before Levy entered as CEO and president, there was a lack of trust within the hospital that led to various communication barriers. On his first day, Levy strategically sent a mass to everyone working at the hospital which established a sense of inclusiveness. He promised to share information and to include them as part of the problemsolving process. Through this , he made each individual employee responsible for the success of the hospital. The partnership created a favorable attitude toward him and the hospital, which was critical in obtaining commitment and support from the employees. As a counterbalance, he also laid out the facts about the current condition at the BIDMC and informed everyone that the threat of selling the BIDMC to a for-profit hospital existed. By communicating this information Levy created a sense of urgency within the community. The possible sale of BIDMC meant insecurity of jobs for doctors, nurses, and staff. In addition, should the sale become inevitable, all doctors would lose their Harvard affiliated professorship as a result. This communication process served as a means of establishing a goal or indicator of achievements for the hospital. In this particular example Paul Levy was utilizing negative motivation. Negative motivation impels individuals to act in a way that forces them away from an adverse outcome, which in their case was selling the BIDMC to a for-profit hospital. A goal was set, and this gave the staff, doctors, nurses, and administration a sense of responsibility and

6 contribution for the success of the hospital. Responsibility is a strong motivator which has the ability to influence employees attitudes. It enforces the idea that the work they produce on a daily basis provides value which will benefit the hospital. By making the employees responsible for the success of the hospital, Levy provides powerful motivation towards achieving the common goal. Levy also provided motivation when he posted the Hunter report on the hospital s public website. Along with making this report public, he highly encouraged all employees to give feedback to the hospital s management. He received hundreds of suggestions all of which he replied to through . Through these actions Levy showed appreciation for employee concerns. From the feedback he received it was clear he was effective in motivating employees to become more active and involved in the workplace. By opening a public channel for employees to review and express their opinions on the hunter report, he received more than 300 s of suggestions from the employees. This fact demonstrated his success in stimulating his employees participation in the workplace, which is one of the most effective motivation techniques. His timely replies to the suggestion s also contributed to motivating his employees. After receiving the reply s from Levy, the employees felt as though he respected and took their suggestions seriously. Motivation theory suggests that successful managerial behavior, such as making employees feel respected and included in decisions, will lead to positive employee performance. Therefore, in this case, those BIDMC employees who received the reply s from Levy were presumably more motivated to support the decisions made by management.

7 4. Teamwork In the area of teamwork, one task Levy performed effectively was the process of team formation. There were several cases in which he seemed to have an inherent knowledge of what functions or resources were required by the different teams and groups within the BIDMC. One example of this was regarding his selection criteria of the hospital s board of directors. Before he was even hired, one of the requirements he laid down to the selection committee was the necessity to shrink the board s size if he was to accept the job. The size of a group is a very important aspect to consider in the team forming process, and he knew that the size of the board was too big to operate efficiently. He managed to shrink the board size down to a group of 15 committee members resulting in a board that worked more efficiently and no longer suffered from miscommunications regarding each individual s responsibility and contribution. Another example of successful team forming by Levy is the task force that he assembled to implement the recovery plan. These teams were a vital part of the turnaround process of the hospital which started with careful consideration of several aspects of the composition of the team. In his interview on March 5, 2002, Levy spoke in detail about how the teams were formed based on the task requirements that would support the overall recovery mission of BIDMC. The first characteristic that he considered was team size. He stated that the teams should be big enough to have a critical mass, but not so big that people don t participate. The second characteristic he spoke about was regarding the background of the team members where he mentioned that the teams should have a reasonably broad representation of the hospital...but you can t have it totally representative. The third aspect was regarding the skills and knowledge of the team members. Levy stated that you want to have people who actually know something about the area and have a key role to play in carrying out the recommendations. In all three of

8 these aspects, it was clear that a delicate balance was required in carefully choosing the right team members that would be able to contribute in achieving the goals. Levy understood this concept, and the success of his task forces showed the effectiveness and careful thoughts that he poured into the process of forming these teams. Another strength that Levy showed in his team management skill was his ability to understand the importance of shared core values within a team. In an interview, he stated that a team generates its best work when its members share the same core values, then everything can be framed around those values. Once the core values were determined, they traveled across the organization and led to tactical and straight communication amongst the various employees which was an essential element to building a positive working team. Furthermore, he said that every decision made was in context of those core values, not only to the hospital but also to society. This shows that Levy understood the core aspects of teamwork which includes working with difficult people and being able to observe the bigger picture in the organization. One aspect of teamwork where Levy could have done better was in organizational politics. One of his steering committees decided to close the dialysis unit in the hospital and outsource it because there were companies which solely did dialysis as a business. These companies could perform the task more efficiently and at a cheaper cost, so the hospital chose not to compete in this area and instead focus on improving the quality of other services that were offered. When the COO informed Levy that some doctors were questioning this decision, Levy asked the Chief of Medicine to reiterate the facts about the decision to those doctors. Even though the Chief of Medicine was part of the decision he sent out an to the doctors stating that Paul had said this decision is final and it s over. This action laid all the blame on Levy. In this situation, Levy should have restated the reasoning behind the decision and explained to the doctors once again

9 why it made fiscal sense for the hospital to outsource dialysis. By presenting this information as a team effort to save the hospital, Levy would have been more effective at building coalitions and alliances within the organization. 5. Conclusion The qualities that have been previously discussed in detail have provided Paul Levy with the means to successfully accomplish the enormous responsibilities that he had in ensuring the recovery of the BIDMC. As discussed, not every decision he made was the best course of action that could have been taken in the various situations that he encountered. However, Levy certainly showed and exerted many qualities that demonstrated his knowledge and mastery in various managerial concepts. Throughout his tenure, he showed a wide range of awareness with not just the topics that were covered in this paper, but also in other areas of management such as communication, self-management, organizational design, and strategic skills. The combination of these managerial skills allowed him to be successful in leading the BIDMC away from failure and towards recovery and overall success.

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