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Better Productivity, Better Retention: Labor Strategy for 2010

For the vast majority of providers, productivity and retention are ongoing labor hassles.  Salaries and benefits are typically, the single largest expense item for health care providers and when analyzed by all of the components, a surprising percentage is allocated for labor related expenses that can and should be, reduced.  Expenses such as Worker’s Compensation, recruitment, turnover, lost productivity due to turnover, pool staff, etc. are resources spent with minimal to no return.

For nearly twenty-five years, I ran a very large multi-site, multi-corporation health system with nearly 1,000 employees.  A number of years back (ten or so), the organization decided to focus on our labor costs and our manpower strategy.  Our turnover was about the industry norm, we had some pool use, our recruiting costs were higher than they should have been, our Worker’s Comp premium was trending up and our overall comp and benefits package, while attractive, wasn’t strategically aligned with who we were trying to recruit – principally experienced, stable employees.  Altogether too often, we hired someone in a panic mode to fill a spot only to find out we hired the wrong people, termed them or they termed themselves,  and then went back to the drawing board.  In the interim, to fill the vacancies resulting from the revolving door, we used pool or temporary staff; premium dollars for no commitment, no real productivity.

By the time I retired in early 2009 and for the seven to eight years preceding, the organization had turned to become the employer of choice in the market area.  Our turnover was less than 10% of our total staff, the majority occurring in non-clinical staff.  Average staff tenure had exceeded ten years and our recruitment budget was less than $100K per year.  Our Worker’s Compensation “modifier” (the factor that correlates work related accident/injury loss experience to premium) was the lowest in the industry – so low that we annually received high five and six figure rebates on our premiums.  We never posted ads for management or administrative positions, never had any employment actions (legal) taken against us save unemployment claims which we universally won on appeal, and had totally eliminated pool or agency use.  Our productivity was extremely high and our Medicare, Commercial and Private Pay payer mix for our reimbursed businesses (SNF, Hospice, Outpatient Rehab, etc.) was fully 75% of our patient days and billed encounters.  We also ran multiple sites, completed multiple acquisitions, and had over a dozen complex service lines (vent, wound, inpatient hospice,, etc.) that required us to recruit and maintain, highly skilled clinical staff.

The point of this post for me, is not to brag but to share some common sense, workable strategies that will, if employed (pardon the pun) properly, increase productivity, increase retention, and reduce non-essential labor related expense.  I have actually used each tactic or strategy below and each has worked (in conjunction with the others) and produced real, tangible results that every provider organization can benefit from.

  • Change hourly and salaried compensation to a very flat scale that compensates each employee for the requirements of the core job – nothing more.  There is no real correlation between longer-term employees being paid more and their relative worth to the organization.  I know this sounds incongruous in light of a retention strategy but trust me, longer-term employees well compensated and performing will be just fine and as we all know, pay doesn’t keep or attract any key staff members.
  • In light of above, increases in hourly and salaried wages should be tied to “market” only or to skill levels.  Career ladders are fine provided they actually correlate to necessary skills, demonstrated competency and “jobs” that actually exist or need to be filled. 
  • Re-work job descriptions for all non-management and non-supervisory positions such that the core of the job description is divided into two thematic areas – job required competencies and behavioral standards.  Job required competencies are the core, functional requirements (demonstrable) that must be completed by the person doing the job, routinely (daily, weekly, monthly, etc.).  Behavioral standards are the requirements established by the profession and/or the organization and are essentially universal to every position or every position within a particular job category.  Examples of behavioral standards are attendance requirements, dress codes, CEU requirements, etc.  Behavioral standards are not things like, “treats co-workers with respect” – this should be an organizational given and the purview of management.  Eliminate from each job description, any non-demonstrable, non-verifiable requirement.
  • Change job or annual performance evaluations to nothing more than a competency based review, based on the job description.  Competency testing should be annual or as frequent as needed when job descriptions change or competencies are altered/added.  Eliminate “compensation” from the discussion as compensation or wages should be determined entirely based on the market, the organization’s budget and its manpower plan (a component of which should include a provision of how the organization determines what level of compensation it will offer in light of the market).  Include in the review, an optional discussion for employee development but such a discussion should only occur based on the desire or choice of the employee.
  • Re-work hiring and orientation practices (non-management, non-supervisory) such that new hires are essentially automatic if the candidate meets the essential requirements of the job.  Orientation thus becomes a very didactic, competency-based process during which, the new hire is fully tested and indoctrinated in his/her job and the organization’s standards for employees.  Require absolute attendance and use tests and/or other forms of demonstration to assure that the new employee has successfully grasped the knowledge and/or demonstrated the core competency of the position.  Be prepared to “terminate” employees that don’t meet the requirements or standards at a high level.  Past experience suggests that employees that “don’t get it” within the first ninety days or less will likely be problem employees throughout their career and certainly, take  far more organizational resources to supervise and manage than what their performance will be worth.  Lastly, don’t let any new hire “start” their full position until he/she has successfully completed every facet of their orientation.  The organization should view this phase as the most critical step toward long-term retention and success of a new hire.
  • With respect to benefits, I am a big fan of unbundling every possible, non-mandated benefit and creating a cafeteria or flexible benefit program that allows each eligible employee to “purchase” the benefits that fit their circumstance or lifestyle.  I am also a big fan of providing lots of choices or voluntary plans such as additional life insurance, extra disability income protection, hospital indemnity, etc.  We even allowed employees to buy additional days off.
  • Create an “employee activities” committee and provide the committee with a budget.  Encourage employees to create almost weekly activity programs and events, mostly simple.  I prefer breaking these activities into four categories: Fun, Education, Wellness, Community Involvement.  Examples of things that we did were food drives, walking programs, wellness fairs, sports themed lunches, ice cream float days, cookouts, etc.  The only requirement for these events is that they must be “open” to every employee on every shift.
  • Share as much information as possible with employees about operations including budgets, strategic plans, census, staffing, quality data, etc.  I also believe that getting employees (hourly especially) involved in quality and customer service/customer satisfaction activities is essential.  The more knowledgeable and involved employees are, the more committed to the organization they typically become.

Assuming the points above are implemented or are in the process of implementation, the next group or set of strategies is undoubtedly the hardest to implement as each involves organizational change and management acumen or competency.  Arguably, without these changes or strategies in-place, the results attained will be weaker and produce much less return for the organization.

  • Rewarding performance must become a group and an individual function, tied to true performance.  The organization should be willing to provide significant bonuses or other tangible rewards to individuals who demonstrate exceptional performance or to groups that demonstrate exceptional performance.  The organization must be exceptionally clear about how it determines performance (must be measurable) and what performance is (outcomes).  Examples of performance are census goals, payer mix, survey results/outcomes, budget/financial performance, clinical indicators and quality measurements and of course, customer satisfaction.  I am a fan of using “scorecards” on key performance outcomes and then posting these measurements for staff to review.  The organization should become willing to “gain share”‘; passing along a percentage of actual gained revenue or saved expense to employees. For example, we shared the dividend we received from our Worker’s Comp experience with employees. Employees knew that the safer we maintained the workplace, the gain we received as result of our safe practices benefitted them.
  • In light of the point above, rewards must be timely and personal.  We used cash, vacations, time off with pay, deferred compensation into retirement plans, etc. for larger rewards.  For small incentives, we used gift certificates, movie passes, flowers, pizza parties, etc.  The whole point here is that performance must be rewarded rapidly and tangibly and the behavior that is part and parcel to good outcomes needs immediate recognition. 
  • Management at every level is key and the organization must commit to developing professional management staff and developing core managerial competencies.   I like the following approach.
    • Require managers to complete an organization sponsored or conducted training program on key managerial competency.  Completion and demonstrated competency is required to maintain the management position.
    • Never promote someone into a management position simply based on tenure or job skill.  Make sure that each manager has managerial competence.
    • Tie managerial compensation to the achievement of organizational objectives, direct objectives of the job and employee/direct report outcomes.  Managers must know that their compensation and future is directly tied to how well their reports and staff perform.  Measure constantly, employee turnover, customer satisfaction, quality and financial outcomes.
    • Give managers the authority and a budget for rewards for their staff.  Measure how frequently the manager is using these tools to reward outcomes and behavior.
    • Make it difficult for managers to take job actions against employees without the involvement of a “higher authority” (senior management, human resources).  Organizational policy should reinforce that employees only get fired or suspended for not performing their job as detailed in their job description (competency) or for behavioral standard infractions (attendance, dress code, etc.).  Managers should understand and embrace the concept that their role is to coach, to plan, to develop and to implement organizational strategies and policies.
    • Create opportunities for managers to interact, to solve problems jointly, to develop new ideas and programs, and to be a part of the overall organization – not just their individual department or function.
  • At the organization level, set a clear standard and practice for very quick termination of employees, regardless of tenure, that do not meet expectations.  Consciously limit written and oral discipline tendencies so that managers know that their responsibility is to lead and to work on performance issues, not simply spend hour after hour disciplining poor performing employees that will likely never be terminated.  If the organization has clearly outlined performance and behavioral standards for each job, employees that don’t meet the standards should be quickly eliminated from the organization.  Documentation thus becomes very simple; a function of matching employee behavior or work product to the job description and the competency testing material that should be a part of each employee’s record.
  • Consciously reinforce to all levels of management that interaction with every level of employee is a necessity and that visibility and knowledge of the core business and the customer is critical.  To do this, the organization must commit to limiting non-essential meetings as well as to an ongoing review process of management that incorporates key performance outcomes that cannot be attained unless management is fully engaged with staff, with customers, and with the process and outcomes of the jobs they (management) lead and direct.

Putting these concepts into action is not an easy or quick process, taking at least a couple of years from start to finish.  Maintenance is also somewhat difficult as the organization must be disciplined to not let creep in, the natural tendencies of humans to want to short cut the steps or to not repeat the maintenance steps (training, orientation, performance monitoring, etc.) frequently – a must.  Without question, the first two or so years will be years with some additional turnover and necessary management turnover as managers will be the most resistant to their new levels of accountability and their new focus of “keeping” employees productive rather than “micro managing” conduct, etc.  What I do know is that when the steps above are flushed out on an organization specific level and implemented, the results in terms of productivity and retention are amazing – well worth the investment and the effort.


January 4, 2010 Posted by | Assisted Living, Hospice, Senior Housing, Skilled Nursing | , , , , , , , , , | Leave a comment

Holding onto Your D.O.N.

In our annual Healthcare Leadership Labor Market Report released in July, we presented some rather alarming trends regarding the long-term care and post-acute care industry’s retention of nursing executives.  For example, we noted that 71% of the Directors of Nursing in nursing homes leave their positions each year.  We also noted that the average tenure of a Director of Nursing is three years.  Within the report, we cited numerous reasons for the short-tenure and resultant turnover with the key take-away point being “job dissatisfaction”.  Of course some or a large amount of the job dissatisfaction within long-term care has to do less with the “job” and more with “what” the job has become as a result of what is going on in the industry today.

The purpose of this post is not to reiterate the informationin the report, rather to provide some key information to combat the trends presented; namely turnover of this incredibly key resource.  What is most important to note however, is why these positions turn and what an organization can and should do about keeping the right people working in the right positions.  The reality most apparent is that there are not enough good nursing executives to fill the voids that are created at the rapid pace at which they are occurring.  The depth of this labor pool is rather shallow, especially when skill and acumen are accounted for as key requirements over against the willingness of a registered nurse to put his or her life and license on the “line”.  To that end, the principal reasons “why” a nursing executive or as is commonly known,  a D.O.N. leaves his or her post are as follows.

  1. Job Dissatisfaction: To be specific, this means general feelings of an inability to adequately perform one’s job and to be recognized for the performance due to the role or positional requirements which are viewed as unreasonable.  In most cases, the demands and expectations are too great for any one person to consistently accomplish.
  2. Industry Dissatisfaction: This dissatisfaction is principally about the present state of the long-term care industry and often is categorized into regulatory and budgetary issues that impact the D.O.N.’s ability (real or perceived) to deliver care sufficient to meet organizational and professional standards.  Not too surprising, labor issues such as staffing are also a part of this factor (insufficient and inadequate staffing numbers).
  3. Hours and Working Conditions: The sheer time demands and the often physical and emotionally demanding role of a Director of Nursing simply takes a toll and lifestyles and personal health (emotional and physical) suffers to the extent that leaving a position is viewed as necessary.
  4. Organizational Dissatisfaction: Key components herein were dissatisfaction with immediate supervisors and dissatisfaction with perceived or real lack of organizational support and allocation of resources.  Important to note that for Directors of Nursing in nursing homes, dissatisfaction with the Administrator was frequently cited and generally, cited more often than overall dissatisfaction with the larger organization.
  5. Professional Needs Not Met (Compensation, Advancement, Autonomy): Somewhat lumped together but this catch-all is rarely the key reason (or reasons) alone for turn-over.  What is important to note however is that compensation in terms of straight salary and benefits in long-term care falls significantly below compensation levels in acute care settings and when viewed in light of the job demands is appallingly low compared to other executives in healthcare and out of healthcare, especially non-clinical executives in healthcare.

Taking the above into account, the key is to devise an overall program and plan that sufficiently reduces the dissatisfiers, where at all possible.  It may seem impractical to think that any organization can change the influence the industry has on a position however, there are strategies that can be used to significantly minimize the negative environmental factors that come to bear and produce turnover.  To be certain, the most important step to take is to create a list of factors that an organization controls directly and a corresponding list of the factors that an organization doesn’t directly control but can manage as a means of developing an overall retention strategy. 

Without going into a full-blown plan that may or may not be applicable to a particular situation, there are some very basic organization level steps that can and should be taken to improve the probability of  D.O.N. retention.

  1. Develop an organizational commitment to keeping goals and objectives extremely clear and focused, inclusive of the time expectations required to complete same.  Involve the D.O.N. directly in establishing these goals and objectives including gaining agreement on realistic time frames for completion and identification of resources required for completion.
  2. Make certain that no organizational expectations are formally or informally enforced regarding “time in office” versus performance.  Provide complete control to the D.O.N. to come and go and be present as necessary and judge performance strictly on agreed-upon goals and objectives – not on time in the office or on a set schedule.
  3. Reduce to a minimum the number of non-essential and often, counter-productive meetings and committees involving the D.O.N.  Meetings add busy work and create confusion and often, lead to endless additional tasks that should be handled elsewhere.  Help the D.O.N. process his/her schedule and assure that maximum time is provided to him or her to complete his/her objectives, not consumed by organizational meetings that are not relevant.
  4. Make abundantly clear to the Administrator that a key element of his/her performance requirements and ultimately, job retention is the retention of the D.O.N.  It may be necessary (and advisable) to have a qualified third-party work with both the Administrator and D.O.N. to forge a true partnership agreement and develop role expectations and a structured reporting relationship.  Long-term care tends to be backward here in so much that Administrators are presumed to be superior roles when in reality, the D.O.N. is often the de facto leader within the nursing home.  Good Administrators fully understand their role and how to complement this relationship and support the work of the D.O.N.
  5. Pay special attention to getting and receiving constant and consistent feedback from the D.O.N. regarding job and positional demands.  Encourage the D.O.N. to participate in external networking opportunities and to take advantage of continuing leadership and clinical educational opportunities.
  6. Provide external resources such as consultants to the D.O.N. pre and post-survey.  Most D.O.N.s don’t feel adequately supported in advance of a compliance survey and don’t have the resources necessary to dissect survey issues.  Surveys are horrendously stressful and are not a true reflection of the D.O.N.’s performance in many cases.  Organizations that are aware of how widely variable compliance surveys are and how inconsistent surveyor practices are understand that D.O.N.s have only so much control over the ultimate outcome.
  7. Increase the expectations of other clinical staff (and the accountability) including the Medical Director in terms of overall patient care and satisfaction.  Too much falls directly on the plate of the D.O.N. that belongs to other disciplines and most often, he/she is left “holding the bag” for what others should have done.  In a fully evolved organization, the D.O.N. and the Administrator should actually jointly oversee and partner in managing and planning the work, required performance outcomes and review of all other clinical/care disciplines.
  8. While financial resources are always tight in long-term care, the organization must make an overt commitment to providing the D.O.N. with sufficient dollars to build and reward an adequate staff and to have current clinical resources and support systems.  Make the D.O.N. aware of key financial issues and measurements but don’t place the onus on him or her to be accountable for other organizational financial matters beyond his/her scope of control.  Too often, D.O.N.s are brought into census and payer mix issues that are only sources of frustration and beyond the scope of what a D.O.N. should truly be concerned with.
  9. Create an overall organization compensation policy that allows for frequent recognition and reward, beyond the scope of standardized evaluation programs, bonus programs and wage increase programs.  These programs work best if they are totally person-centered, allowing for the compensation program of the D.O.N. to be personalized.  Rewards and recognition need to be frequent and not just monetary.  Programs that use paid time off as reward, gift certificates, movie passes, flowers, spa certificates, etc. are viewed by all staff as significant and personal and D.O.N.s need to be a part of these programs and have the programs at their disposal for use among their own staff.

There is a time worn saying that is appropriate: “Its cheaper to keep them than to lose them”.  In too many cases, a highly qualified D.O.N. leaves only to be replaced by someone lesser qualified, often at a higher cost and in all cases, at a higher organizational cost.  Rarely is the replacement of this position an “upgrade” and certainly, at the rate of turn-over (once every three years) nearly always at a strategic and financial disadvantage to the organization.

September 2, 2009 Posted by | Skilled Nursing | , , , , | Leave a comment