July 13, 2010 Printer Friendly Version Advertise Join ASHHRA
           
   
PRESIDENT'S MESSAGE

Hello, ASHHRA Members:

By now, for those of you who, like me, are on an October fiscal year, you're deeply enmeshed in the fiscal year 2011 budget preparation. And it's likely you're finding it a challenging, and in some cases, a daunting proposition.

Two of the largest components of any budget, labor and benefits, land right at HR's feet as our organizations struggle for answers and strategies. Often we in HR can only offer blank looks in response to their questions. Well, take heart! ASHHRA continues to be the source of health care HR information and connection for you, equipping you with vital information for you and your organization.

And the capstone of all of the ASHHRA knowledge and community is just around the corner, at our annual conference and exposition this September in Tampa, Florida. Tap into ASHHRA for answers you need today... and tap into the ASHHRA conference in September for the answers you'll need for tomorrow.

Jeff Payne, SPHR
Vice President, Human Resources
Lakeland Regional Medical Center
1324 Lakeland Hills Boulevard
Lakeland, FL 33805-4500
P: 863-687-1045
F: 863-284-1971

 
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MANAGEMENT & LEADERSHIP

Every initiative, every issue, and every success in a health care organization involves people. To be successful, all organizations have internal experts to provide direction and insight on key components of the organization. Being the expert on setting a direction, creating a culture of leadership, and balancing the myriad of competing interests requires a CEO. And being an expert on how to lead, manage, and motivate people requires a Chief Human Resource Officer (CHRO).

With the current focus on supply costs, inventories, and productivity, we sometimes overlook the fact that the senior HR leaders in health care have the responsibility to strategically manage the most significant and largest expense and resource of any health care organization – the people who provide the care and service. Even though the CFO does not have complete control or influence over supply costs, it remains their ultimate responsibility to make sure the costs are managed efficiently and wisely. Likewise, the CHRO has the added responsibility of dealing with the tightly intertwined cost of people and the impact any decisions will have on the motivation and engagement level of individuals with emotions and concerns.

Ensuring that the people management systems are efficient and provide effective employee relations is critical. Effective people management systems impact an organization on many levels, such as reducing the cost of turnover, preventing quality issues caused by vacancy rates, minimizing the energy and effort required to create an engaged work force, and avoiding wasted dollars on compensation practices which no longer have a positive impact. When these efforts are not well balanced by an expert, there can be a substantial economic impact and limitations to becoming a high performing organization.

It is important for the CHRO to think strategically and be viewed as having a strategic role in the success of the organization – not just the success of HR.

With over thirty years experience working with health care executives, and the research we have conducted in surveying tens of thousands of leaders, MSA HR Capital, a practice of Integrated Healthcare Strategies (IHStrategies), has found "a seat at the table"' is more likely to occur for the CHRO when the following four factors are evident:

  1. The CHRO thinks strategically by ensuring that the resources under their responsibility are managed wisely;
  2. The CHRO is viewed as the 'People' expert, not just the HR expert, and is regarded by senior executives and the board of trustees as a sought-after advisor on human capital issues;
  3. The CHRO has the expertise and ability to help the senior team manage and make decisions on issues involving the overall success of the organization -- not just the success of specific human resource functions;
  4. The CHRO has the political and persuasive skills to garner the support of the senior executive team to place specific 'People' initiatives at the same value and importance level as financial, clinical, or quality initiatives.

In this article, we will explore each one of these factors.

STEP 1: THE CHRO THINKS STRATEGICALLY BY ENSURING THAT THE RESOURCES UNDER THEIR RESPONSIBILITY ARE MANAGED WISELY

Economic Impact on Compensation Practices
In 2008 and 2009, health care organizations made financial changes in reaction to the economy such as reducing salary increases, freezing salaries, work force reductions, decreasing or eliminating retirement investment matching, and implementing hiring freezes – all affecting human resources. One result of these uncertain times is the opportunity CHROs have to transform their role by increasing involvement in the financial and strategic goals of their health care organization. MSA HR Capital consultants have witnessed human resource leaders become key players – true CHROs – in devising plans to solve the financial dilemmas that many organizations are experiencing. Not only is their expertise needed for identifying efficiencies in their systems, but also for maintaining positive employee relations during the necessary changes.

These CHROs are becoming the driving force behind identifying financial savings through reviewing their compensation program and resources from an efficiency standpoint. CHROs have begun exploring efficiencies in the human resources systems, such as compensation, in order to reduce expenses and release funds for the essentials in difficult economic times.

One such essential for which funds are needed is maintaining competitive levels of hiring rates for staff level positions. In turn, staying competitive helps to keep turnover low, providing further cost savings.

The Opportunity
A recent survey conducted by IHStrategies revealed that over 15 percent of participants have made decreases to their differential pay, and over 10 percent have made decreases to specialty pay under the current economic conditions. The following are other areas where efficiencies have been realized:

  • Eliminating legacy compensation policies for which the necessity has passed;
  • Removing accrued time off for leadership positions as a liability;
  • Pay for certifications where the market is no longer differentiating;
  • Overtime calculations that are more generous than legally required;
  • Job titling;
  • Application ratios; and
  • Call pay.

Traditionally, the human resource budget has not been viewed the same way as other areas of health care organizations. For example, if a materials management department is asked to find ways to decrease costs by 5 percent, that department would look for ways to purchase comparable products for a lower price. CHROs that view their department from this perspective begin to be perceived by the other leadership members as strategic business partners.

STEP 2: THE CHRO IS VIEWED AS THE 'PEOPLE' EXPERT, NOT JUST THE HR EXPERT, AND IS REGARDED BY SENIOR EXECUTIVES AND THE BOARD OF TRUSTEES AS A SOUGHT-AFTER ADVISOR ON HUMAN CAPITAL ISSUES

Being the 'People' Advisor
People are the driving force of any organization, especially in health care, where people are taking care of people. Being the 'people' advisor involves not only understanding and developing an engaged employee environment, but also being the strategic 'people' advisor to other executive team members and the board of directors. The three areas of expertise that can elevate the HR Leader to the 'people' advisor are the following:

  1. Being aware of the alignment among the levels of leadership and employees;  
  2. Understanding the psychological aspects of engaging and motivating employees; and  
  3. Creating an environment of mutual trust based on a professional, adult, and transparent relationship.

Alignment
There are typically four levels of leadership within a health care organization: Board Members, Executives, Directors, and Managers, and first level supervisors and team leaders. Based on the research through our Employee and Leadership Opinion Survey, high performing health care organizations have a common characteristic – a high level of alignment among leaders and employees. Alignment is composed of three parts – a common understanding of the direction and outcome the organization desires, gaining 'buy in' or acceptance of that direction, and providing the resources to achieve the desired outcomes. It is important that employees view the various levels of management as working in unison and being on the same strategic page with the mission, vision, and values of the organization, as well as delivering the same messages to employees.

If leadership is not tightly aligned, employees will have difficulty working with the organization to move forward effectively. It may sound odd, but it is better for employees to view all of management negatively at a common level, than to perceive middle management more positively than senior leadership or vice versa. It is imperative that a true 'people' advisor be aware of the level of alignment of the leadership within the organization and, if misalignment is apparent, develop strategies to reduce the gaps in leadership alignment within the organization.

Many times organizations go to employees directly when they struggle with alignment and skip connecting leadership first, just assuming that because they are in leadership, that there is a common understanding and acceptance of the stated direction.

Engagement
Moving from satisfaction to engagement is the newest employee development strategy for health care. Engagement is basically a mutual trust between employees and leadership. The typical belief is that engagement occurs when employees trust leadership, but it is important to recognize that full engagement does not occur unless management fully trusts employees.

Although trusting all employees may not be possible, since our findings over the past thirty-five years have consistently shown that 7-9 percent of employees in any organization are inherently negative and it is difficult to place trust in them, it is possible to develop a highly trusting and engaged relationship with the majority of employees. Anywhere from 35 percent to 75 percent of employees are intrinsically motivated to perform within the organization and help it move forward if there is a mutual trusting and engaged relationship developed. An HR leader can help foster engagement by working with other leaders to identify the engaged and potentially engaged employees and cultivating them to improve performance in their area, and eventually the organization as a whole.

Professional Environment
Another driver for a successful organization, and also another area that an HR leader can use to elevate their role, is the relationship of the organization with employees. Through our extensive research and experience consulting with health care organizations, we have found that organizations that develop a professional, adult relationship with employees have higher productivity, a natural motivational environment, and increased flexibility. Included in this professional relationship is transparent communications with employees about issues such as budget cuts, compensation, potential layoffs, or potential salary freezes. Creating a theme of 'telling employees everything unless there is a legitimate reason not to inform' (confidential, timing) as compared to a more common communication approach of 'not telling employees anything unless there is a good reason to inform', is a fundamental component of creating a more engaged and aligned work force.

We find that HR leaders with the ability to help the organization foster this open relationship with employees are also able to elevate their role. It is sometimes a difficult challenge, especially when there is a percentage of employees who struggle with behaving as adults. In addition, health care is inherently nurturing, and leadership and employees tend to gravitate to a 'take care of us' mind set, based on paternal or maternal characteristics. Breaking out of this mode can result in initial pushback, both from leaders and employees, but we have found over time the transition is remarkable, and fundamentally changes and improves the organization. Something as simple as removing the concept of 'discipline' from our language indicates a more professional, adult relationship, since we typically discipline children with judgment about the appropriateness of their behavior. In a more adult relationship, we speak of setting reasonable expectations - without judgment as to whether someone is 'good' or 'bad' for failing to meet those expectations – but simply the relationship is based on mutual expectations, and that if those expectations are not met, the relationship ends (another language change from 'termination' to 'ending the relationship').

STEP 3: THE CHRO HAS THE EXPERTISE AND ABILITY TO HELP THE SENIOR TEAM MANAGE AND MAKE DECISIONS ON ISSUES INVOLVING THE OVERALL SUCCESS OF THE ORGANIZATION -- NOT JUST THE SUCCESS OF SPECIFIC HUMAN RESOURCE FUNCTIONS

Being a "Business Partner"
Human Resource Executives in health care have not traditionally been viewed as a true business partner to their peer executives. They have typically been seen as an expert in the specific area of human resources. HR leaders who have found a full "seat at the executive table" possess:

  1. A broad knowledge of the business functions of health care organizations; 
  2. An understanding of human behavior and motivation; and
  3. Credibility and influence with the Board of Directors of the health care organization. 

Business Knowledge
HR leaders that have a broader understanding of the business functions within their health care organization are much more likely to be viewed as a business partner to the other executives and the board. In the highly complex environment of health care, only having extensive expertise in one area without a broad understanding of overall business operations limits an executive's ability to contribute effectively to the overall leadership of the organization.

 A high performing CHRO should have an understanding of the functionality of the organization similar to that of a CEO – a knowledge of the operations overall, but not necessarily the details of each particular area within the organization. This includes a working knowledge of reimbursement models and the relationship with insurers, the various regulatory requirements, clinical and quality programs, and an understanding of the business and finance functions. Many HR executives are perceived as experts in human resources by their senior leader colleagues. But it is vital for the CHRO to be viewed as knowledgeable about the other functions of the organization, as well.

As an example, one key piece of knowledge for any health care executive to understand is the reimbursement models for both private insurance and federal programs. Understanding the basic concepts and issues related to negotiations with insurers, as well as the complexity of federal and state payment models, allows a CHRO to be a part of the development of strategies to maximize the opportunity for the organization's financial success. From understanding which areas of the delivery system provide the best reimbursement, to determining the competitive pay position of certain jobs based on the potential revenue they may bring to the organization, allows the CHRO to be a strategic business partner to the organization. Only looking at the expense side of the HR function limits a CHRO from being involved in the total discussion with the CFO, COO, and CEO.

Human Behavior and Motivation
Since the 'people' side of health care is the one common aspect of a health care organization's performance, a human resource executive who is seen as a 'people' expert will naturally become a sought after advisor. Understanding the components of fundamental human behavior, group dynamics, personal and group motivation, as well as various value models and profiles enables the CHRO to answer the question 'why did they do that?' or 'how can we get this team to work?' Each person involved in either the delivery of care or the support of the care is motivated in some manner, and there are clear differences in both identified groups, as well as within various clinical and operational environments. Understanding that everyone is not motivated the same way enables various performance enhancement models to be developed. Many organizations struggle because only one model is utilized, limiting its effectiveness.

Even supporting how to effectively approach non-traditional HR areas can be a key to the CHRO being seen as a 'people' expert. Understanding the motivations and 'people' components of both the hospital's and insurance company's negotiating team and how it will impact the process, or being able to identify the various motivations and issues of a medical group considering selling their practice to the hospital, can make the difference from those transactions being successes or failures. The ability to identify that some individuals are intrinsically motivated to do their jobs for the sake of helping people, some are motivated by additional money and/or prestige, and others are motivated simply by improvement, can be the key in developing successful strategies and approaches to fundamental issues facing the organization. The CHRO will be recognized for adding value to any discussion because they can help develop more effective strategies to achieve the organization's objectives which leads to an elevated role within the executive team, as well as with the Board of Trustees.

Board Accountability
In a typical Board meeting, there is a clear agenda which includes discussion and reporting on key accountabilities: financial performance, clinical and quality outcomes, capital improvements, and community and medical staff relations. Each executive responsible for those areas shares their accountability with the CEO and is seen by the Board as an expert in that area. It may not be unusual for an HR Committee of the Board to discuss and hold accountable the CHRO for traditional HR functions, including employment and turnover, performance review, and compensation strategy. Although this type of Board accountability can be positive, it actually tends to limit the view of the CHRO by the Board to simply the HR function.

On the other hand, if the CHRO is held accountable for the broad 'People' side of health care delivery - similar to the CFO being held accountable for the 'Financial' side of health care delivery - the impact and value of the CHRO is elevated dramatically. Since there is a people component in every aspect of health care, having the Board hold the CHRO accountable to ensure that an effective 'people' plan is in place for every significant initiative (similar to the accountability that a financial plan be in place for every initiative) can change the entire dynamic of the CHRO role and can drive the change deeper in the organization than simply a discussion at the senior executive level.

As an example, if the organization is considering developing a new 'Heart Hospital,' there would clearly be a discussion and accountability by the Board to develop a plan outlining the financial impact of the initiative, the roadblocks to success, as well as solutions to overcome key issues. Ideally the Board would also require that a simultaneous 'people' plan be developed to identify how the new hospital could be properly staffed at a cost which could be managed consistent with the financial projections. Such a plan should also outline potential roadblocks and solutions to key issues, including culture development and managing tensions with the current work environment. Having the Board recognize that without an effective 'people' plan the initiative has a lower chance of success creates a need for accountability, which brings with it additional responsibility and value to the organization for the CHRO.
Building the Board's understanding of the need for 'people' accountability typically requires a high level of Board education, as well as support from the CEO and other senior executives. Once there is an understanding of the value a 'people' plan can bring to the success of key projects and initiatives, adding to the Board agenda the CHRO's section of 'What is our People Plan?' will become as normal as the section 'How does this impact us financially?'

STEP 4: THE CHRO HAS THE POLITICAL AND PERSUASIVE SKILLS TO GARNER THE SUPPORT OF THE SENIOR EXECUTIVE TEAM TO PLACE SPECIFIC 'PEOPLE' INITIATIVES AT THE SAME VALUE AND IMPORTANCE LEVEL AS FINANCIAL, CLINICAL, OR QUALITY INITIATIVES

Elevating the People Initiatives
We have discussed that traditionally human resource executives in health care have not been viewed as a full peer to the other executives – they have typically been seen as an expert in the specific area of human resources with issues that are typically less critical than other areas, such as finance or patient care. In order to elevate important 'people' initiatives to the same importance level that financial, clinical, or quality initiatives are typically perceived, HR leaders must develop political knowledge of the organization and learn the art of persuasion.

Political Knowledge
The political environment is different in every organization. Each executive and Board member has specific agendas and different motivations, and alliances vary depending on the issue. Through interactions with hundreds of health care executive teams, we have observed the politics of influence and recognize which are effective at moving forward agendas and impacting the organization as a whole. Because 'people' initiatives are more ambiguous and less measureable, the ability to elevate the important issues around the people of the organization is diminished when financial and other more 'metric' issues dominate the conversation.

Typically, to gain more influence, there is an attempt to create more 'metrics' for people strategies so they can be weighed against other initiatives. But understanding individuals' motivations is key. HR leaders that take the time to observe the personalities, interactions, and the overall politics of the environment have an advantage in convincing others that the 'people' initiatives are important and beneficial to the organization in many ways. Although 'metrics' are important and do have value, because of the nature of people strategies, the metrics for them tend not to measure up to the metrics of other initiatives. By learning the personalities of the leadership team and understanding their dynamics, more influence is developed and the HR leader can determine the steps necessary to persuade the other executives.

Persuasive Skills
Understanding the politics in the organization is only the first step in elevating the 'People' initiatives to the level of clinical, financial, and quality initiatives. Once the HR leader has learned the players in the politics of the organization, he or she must next find ways to be more persuasive. Each individual is motivated by different items, and understanding those motivations is the key to influence. Most executives are motivated by the higher performance of the organization, but also understanding the alliances and motivations of executives and board members on a personal level can be vital.

Persuasive skills are varied. Some individuals are persuasive because of their manner of speaking and presence. Others are persuasive because they can build a solid case, explain it well, and convince people through logic and information. Credibility and integrity is also a key component of persuasion. A person with credibility, either earned or borrowed from another, is a step ahead in being able to convince others. Having a key leader "lend" their credibility to the HR executive helps establish a foundation for persuasion.

Some persuasive skills can be learned while others are innate. One persuasive skill that can be learned is determining other's motivations and building your case to appeal to those motivations. For example, a key executive is interested in instituting a new quality initiative. If the HR leader understands that, and can tie the arguments for creating a better on-boarding program for new hires to increasing the quality of patient care, the executive is more likely to see the value in the 'people' initiatives.

Conclusion
For an organization to become high performing, the HR leader must be viewed as a full member of the executive team. Having strength in the 'people' areas of your health care organization is just as important as providing high-quality patient care and performing well financially - the three go hand-in-hand. Organizations that commit to supporting their human capital have higher quality patient care and typically are more financially sound. HR leaders who can think strategically, are viewed by their peers as the 'people expert,' are a sought-after 'business partner,' and are able to elevate the 'people' initiatives in their organization, are instrumental in an organization's ability to become a high-performing organization with a higher percentage of engaged employees.

For years, as HR executives, we have known that if we had a "seat" at the table, we could make a significant impact on the organization. By taking a planned and focused approach, with the goal to create more influence in the organization, not only will HR executives help health care be more successful, but they will elevate the overall role of HR in health care.

Kevin Haeberle is executive vice president and practice leader of the MSA HR Capital practice of Integrated Healthcare Strategies. Haeberle may be contacted by calling 800.821.8481 or e-mailing Kevin.Haeberle@IHStrategies.com. Martina Young is a senior consultant with MSA HR Capital and may be contacted by calling 800.821.8481 or e-mailing Martina.Young@IHStrategies.com.

 
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To advance the human side of health care, the American Society for Healthcare Human Resources Administration (ASHHRA) leads the way for highly effective, valued, and credible leaders.


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