Chapter 12: Human Resources System Teaching Goals The chapter offers an opportunity to review the philosophy of human resources management that prevails in high-performing healthcare organizations (HCOs) and to make sure that the students have a firm grasp of both its content and its importance. The core lesson is that the human resource function rises to prominence in transformational management. Each individual has a value to the organization, and that value needs to be maximized like the value of any other asset. Departures, whether preventable or not, represent a financial loss and should be minimized. Maintaining a stable workforce capitalizes learning. Places that do it are not impaired by shortages, do not have as many errors and rework, have loyal associates who create loyal patients (service excellence), and implement improvements quickly. Well-run HCOs now expect turnover less than 10 percent per year; the best are reporting only five percent. These organizations also make profits and contribute substantially to their communities. The human resource asset itself is not trivial. Replacing each employee costs several thousand dollars, and the new employee still lacks his predecessor s experience. We know of no evidence to challenge the core lesson. Too many HCOs have demonstrated it, and there is no competing theory that offers even reasonable promise. HCOs that have low associate satisfaction, high turnover, and worker shortages are simply mismanaged. (A small caveat: there may be some locations so difficult that a sufficient stable workforce is out of reach. If they exist, they are probably in inner cities and depressed rural areas. It is likely, but not proven, that transformational management would help them as well.) Successful transformational management requires a great deal more than simply human resources management, basically everything covered from Chapter 2 on. People are loyal to an organization because it functions well rather than because it pays well or has good benefits. And it must function well before it can pay well or support good benefits. That said, human resources management is a critical part of functioning well. As the result, the HR Department has expanded from a background support activity to a central part of the organization. The vice president of HR has become the chief learning officer. The change in title reflects a doubling or tripling in the investment in training. It also represents a change in mission, from providing paychecks and background checks to ensuring an adequate and loyal associate force. It is not hard to take the functions listed in Figure 12.1 (p. 468 in the book) and answer three questions: 1. What does this function contribute to overall performance? 2006 John R. Griffith and Kenneth R. White
2. How do we know this function is being performed well? 3. How do we improve performance? Students should finish the chapter with useful answers to all three. In a Few Words Leading HCOs now think of their associates as the human resource, a valuable and improvable asset measured by its loyalty (willingness to continue working and willingness to recommend to others) and its learning (ability to identify, design, and implement improvements). Service excellence attracting loyal customers by providing excellent service can be achieved when associates are both loyal and learning. It demands a universal commitment to mission, vision, and values and a solid foundation of measurement, continuous improvement throughout the organization, as well as in human resources management. Human resources contributes important support, including managing a number of services but, more importantly, supporting an extensive training program for workers and management. Senior management must initiate and maintain the culture of loyalty and learning, it cannot be performed by the human resources unit alone. Chapter Outline Achieving excellence in the traditional functions of human resources Recruitment and selection Training Compensation and benefits Counseling and employee support Measuring and improving associate loyalty Maintaining and analyzing statistics on retention, absenteeism, and safety Surveying associates Listening to associate needs Building an attractive workplace environment Stopping overt discrimination and harassment Implementing a value of respect Promoting service excellence Training for workers in meeting customer needs Training for managers in responding to worker needs Providing rewards for exceptional effort in customer responsiveness Building diversity and bench strength Encouraging individual leadership development plans Identifying and assisting high-potential managers Maintaining a succession plan 2006 John R. Griffith and Kenneth R. White 2
Powerpoint Slides See Learning Tools. Questions to Debate Slides of the individual questions are downloadable. We have prepared some summary thoughts on the content of class discussion. Obtain this information by writing (conventional mail) on academic letterhead to: John R. Griffith School of Public Health The University of Michigan 109 Observatory St. Ann Arbor, MI 48109-2029 (Please include an academic (dot edu) e-mail address.) 1. Why have many organizations found that worker loyalty promotes customer loyalty? Are there situations where that might not be true? 2. Is diversity important in healthcare organizations? Why are some ethnic groups underrepresented in higher paying positions? What are some of the issues in helping women advance in management? 3. The well-run organization strives for compensation that treats similar positions equitably and that is competitive with similar employment elsewhere. Why? Are you sure you agree? If you have doubts, what are the alternatives? 4. Most organizations do not score very well when they first install multidimensional measures. Suppose you found yourself in management of an organization that was in trouble on all the balanced scorecard measures of Figure 3.4. How would you start recovery, with operations, finance, workforce loyalty, or customer loyalty? What might a successful strategy look like? 5. The chapter ends with the words, any deliberate distortion by any member of management is generally grounds for immediate dismissal. Why? How can you establish the difference between deliberate distortion and honest mistake? 2006 John R. Griffith and Kenneth R. White 3
Additional Discussion Questions 1. HR functions. Which of the six functions shown in Figure 12.1 (p. 468) can an HCO s HR department sell to affiliated physicians offices? What would satisfy a discriminating buyer of such services? 2. Workforce plan 2.1. Why is workforce planning important? Can an HCO increase workforce supply? Can it reduce terminations? Should it try to do these things? Why or why not? 2.2. Would you establish a committee analogous to the information services advisory committee (Chapter 10) to assist in reviewing the workforce plan? Why or why not? Who should be on it? (Provisions of labor laws may be relevant here because the committee can be construed as an effort to avoid or interfere with collective bargaining.) 3. Workforce maintenance as the foundation for service excellence 3.1. Are all the activities listed under the heading of Workforce Maintenance (Figure 12.1) equally important? Which do you feel would be more difficult to accomplish? What are the likely consequences of weaknesses in these activities in terms of HCO strategic performance measures (Figure 3.5)? 3.2. The eight steps of recruitment and selection (pp. 471-73) seem unnecessarily rigorous and bureaucratic. Try simplifying or shortening the list. What dangers could result from shortening the list? How do you make an unwieldy process like this effective in a competitive marketplace? 3.3. Is worker safety important? Why are HCOs less safe than the average workplace? What can/should be done about that fact? 3.4. Suppose that an organization s workforce plan called for a 10 percent reduction in force over two years. List the devices the organization might use to achieve this goal. Identify the kinds of costs that are associated with each (precise cost estimates are usually very difficult), and use these to rank order the devices, developing a strategy to meet the goal. 4. Workforce development. Should a well-managed HCO offer employee and educational services such as those listed on page 475? Select an example of an educational program that fits one category of the list (e.g., a Six Sigma program, outplacement assistance, explanation of healthcare benefits). How would you judge whether the organization was spending the right amount of money on your example? 2006 John R. Griffith and Kenneth R. White 4
5. Service excellence 5.1. What are the elements of service excellence that go beyond workforce maintenance and development? Why might these added activities be worth the investment? 5.2. What is the appropriate role for HR in developing service excellence? What other units of the total organization must support the concept, and what is their role? 5.3. How do the following concepts contribute to service excellence? What might be some barriers or roadblocks to installing them? How would you overcome these? 6. Compensation Supervisory and management training Leadership development Succession planning Service recovery Rewards and recognition for associates 6.1. What policy should a well-managed HCO follow in compensating its various professional and nonprofessional workers? Why? 6.2. Under what conditions is incentive compensation a good thing for a wellmanaged HCO? How could it be dysfunctional? 6.3. What sort of health insurance benefit should HCOs offer? 6.4. In staying competitive with employee compensation, how is information obtained about competitors salaries? Is it permissible to solicit salary information from competing organizations? 7. Collective bargaining 7.1. Why has union membership declined steadily in the United States for many years? 7.2. Well-run healthcare organizations will seek a position that discourages unionization or diminishes the influence of existing unions (p. 621). How is such a position achieved? Is it in fact a wise position? When might it be unwise? 8. Human resources improvement 8.1. How would you determine the correct amount for a well-managed HCO to spend on its HR activities? 8.2. Why might it be wise to organize all or most HR functions under one accountable vice president? 2006 John R. Griffith and Kenneth R. White 5
8.3. Explain to the new HR vice president what the organization expects of him/her? 9. Contract HR management. Companies sell HR services to organizations that choose to outsource the HR function. Identify the factors that should be considered in evaluating contract versus in-house HR services. Why is contract service not more popular than it is? 10. HR in healthcare systems. What is the role of centralized HR services? What sorts of policies should be centralized, and what should be decentralized? 11. How would the HR function interrelate with the medical staff office? What would be the role of the HR department with employed physicians? With independent attending physicians? Questions for Examination These questions are less ambiguous than the discussion questions. Obtain these questions and the authors answers by writing (conventional mail) on academic letterhead to: John R. Griffith School of Public Health The University of Michigan 109 Observatory St. Ann Arbor, MI 48109-2029 (Please include an academic (dot edu) e-mail address.) 2006 John R. Griffith and Kenneth R. White 6