Human resources in healthcare managing for success 3rd edition

Human Resource In Healthcare( Project )

HUMAN RESOURCES HUMAN RESOURCES IN HEALTHCARE Managing for Success

THIRD EDITION

Bruce J. Fried and Myron D. Fottler, Editors

Fried Fottler

Human Resources in Healthcare: Managing for Success, Third Edition, presents the techniques and practices behind effectively managing people—the healthcare industry’s most important asset. It provides the concepts and practical tools necessary for meeting the unique challenge of managing healthcare employees.

New in this edition: n An expanded chapter on health and safety in the workplace, highlighting

disaster preparedness and management n A chapter on globalization and the mobile workforce n A chapter focusing on employee benefits and benefit design n An expanded chapter on training and career development n A new section with cases that emphasize the organization-wide impact of

human resources decisions

This book covers fundamental topics as well as timely issues.

About the Editors: Bruce J. Fried, PhD, is an associate professor and director of the Residential Master’s Program in the Department of Health Policy and Administration in the School of Public Health at the University of North Carolina at Chapel Hill. He teaches and has written in the areas of global health, human resources management, unionization, and strategic planning and marketing. Dr. Fried is also coeditor of and contributor to World Health Systems: Challenges and Perspectives (Health Administration Press, 2002).

Myron D. Fottler, PhD, is a professor and executive director of Health Services Administration Programs at the University of Central Florida, where he teaches courses in healthcare human resources management, service management and marketing, and dissertation research. He has written and published 16 books and more than 130 journal articles.

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One North Franklin Street, Suite 1700 Chicago, Illinois 60608-3529 Phone: (301) 362-6905, Fax: (301) 206-9789 www.ache.org/hap.cfm

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HUMAN RESOURCES IN HEALTHCARE Managing for Success

THIRD EDITION

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AUPHA HAP

Editorial Board

Sandra Potthoff, PhD, Chair University of Minnesota

Simone Cummings, PhD Washington University

Sherril B. Gelmon, DrPH, FACHE Portland State University

Thomas E. Getzen, PhD Temple University

Barry Greene, PhD University of Iowa

Richard S. Kurz, PhD St. Louis University

Sarah B. Laditka, PhD University of South Carolina

Tim McBride, PhD St. Louis University

Stephen S. Mick, PhD Virginia Commonwealth University

Michael A. Morrisey, PhD University of Alabama–Birmingham

Dawn Oetjen, PhD University of Central Florida

Peter C. Olden, PhD University of Scranton

Lydia M. Reed AUPHA

Sharon B. Schweikhart, PhD The Ohio State University

Nancy H. Shanks, PhD Metropolitan State College of Denver

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HUMAN RESOURCES IN HEALTHCARE Managing for Success

THIRD EDITION

Bruce J. Fried and Myron D. Fottler, Editors

Health Administration Press, Chicago Association of University Programs in Health Administration, Arlington, Virginia

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Your board, staff, or clients may also benefit from this book’s insight. For more informa- tion on quantity discounts, contact the Health Administration Press Marketing Manager at (312) 424-9470.

This publication is intended to provide accurate and authoritative information in regard to the subject matter covered. It is sold, or otherwise provided, with the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be sought.

The statements and opinions contained in this book are strictly those of the author(s) and do not represent the official positions of the American College of Healthcare Executives, of the Foundation of the American College of Healthcare Executives, or of the Association of University Programs in Health Administration.

Copyright © 2008 by the Foundation of the American College of Healthcare Executives. Printed in the United States of America. All rights reserved. This book or parts thereof may not be reproduced in any form without written permission of the publisher.

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Library of Congress Cataloging-in-Publication Data

Human resources in healthcare: managing for success / Bruce J. Fried and Myron D. Fottler, editors.—3rd ed.

p. cm. Includes bibliographical references and index. ISBN 978-1-56793-299-7 (alk. paper) 1. Health facilities—Personnel management. I. Fried, Bruce, 1952- II. Fottler, Myron D. [DNLM: 1. Personnel Management—methods. WX 159 H91807 2008] RA971.35.H864 2008 362.1068’3—dc22

2008013657

The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI Z39.48-1984. ™

Project manager: Jane Calayag; Acquisitions editor: Audrey Kaufman; Cover designer: Anne LoCascio; Composition: Putman Productions, LLC

Health Administration Press Association of University Programs A division of the Foundation in Health Administration

of the American College of 2000 14th Street North Healthcare Executives Suite 780

One North Franklin Street Arlington, VA 22201 Suite 1700 (703) 894-0940 Chicago, IL 60606 (312) 424-2800

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BRIEF CONTENTS

Foreword .............................................................................................. xiii William K. Atkinson, PhD

Preface ................................................................................................... xv

1 Strategic Human Resources Management ......................................... 1 Myron D. Fottler, PhD

2 Healthcare Workforce Planning ...................................................... 27 Thomas C. Ricketts, III, PhD

3 Globalization and the Healthcare Workforce .................................. 47 Leah E. Masselink

4 Healthcare Professionals ................................................................. 71 Kenneth R. White, PhD, FACHE; Dolores G. Clement, DrPH, FACHE; and Kristie G. Stover, PhD

5 The Legal Environment of Human Resources Management ........... 99 Beverly L. Rubin, JD, and Bruce J. Fried, PhD

6 Workforce Diversity ..................................................................... 145 Rupert M. Evans, Sr., DHA, FACHE

7 Job Analysis and Job Design ......................................................... 163 Myron D. Fottler, PhD

8 Recruitment, Selection, and Retention ......................................... 197 Bruce J. Fried, PhD, and Michael Gates, PhD

9 Organizational Development and Training ................................... 237 Rita Quinton, SPHR

10 Performance Management ........................................................... 257 Bruce J. Fried, PhD

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11 Compensation Practices, Planning, and Challenges ....................... 281 Howard L. Smith, PhD; Bruce J. Fried, PhD; Derek van Amerongen, MD; and John D. Laughlin

12 Employee Benefits ....................................................................... 319 Dolores G. Clement, DrPH, FACHE; Maria A. Curran; and Sharon L. Jahn, CEBS, CMS

13 Health Safety and Preparedness .................................................... 347 William Gentry

14 Managing with Organized Labor ................................................. 359 Donna Malvey, PhD

15 Nurse Workload, Staffing, and Measurement ................................ 393 Cheryl B. Jones, PhD, RN, and George H. Pink, PhD

16 Human Resources Budgeting and Employee Productivity ............ 433 Eileen F. Hamby, DBA

17 Creating Customer-Focused Healthcare Organizations Through Human Resources ......................................................... 451 Myron D. Fottler, PhD, and Robert C. Ford, PhD

18 Present Trends that Affect the Future of Human Resources Management and the Healthcare Workforce ................................. 479 Bruce J. Fried, PhD, and Myron D. Fottler, PhD

Integrative Cases

1 Reduction in Force at Sierra Veterans Affairs Medical Center ........ 501 Sarah Huth and Sara Hofstetter

2 Management Challenges of a Customer Service Center ................ 511 Andy Garrard and Heather Grant

3 Performance Feedback Now and Then ......................................... 523 Lee Ellis, Dawn Morrow, and Adia Bradley

Index ........................................................................................... 529

About the Editors ........................................................................ 537

About the Contributors ............................................................... 538

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DETAILED CONTENTS

Foreword.............................................................................................. xiii William K. Atkinson, PhD

Preface ................................................................................................... xv

1 Strategic Human Resources Management.......................................... 1 Myron D. Fottler, PhD

Learning Objectives, 1; Introduction, 1; Environmental Trends, 4; The SHRM Model, 6; Organizational Mission and Corporate Strategy, 11; Human Resources and the Joint Commission, 19; A Strategic Perspective on Human Resources, 20; Summary, 22; Discussion Questions, 23; Experiential Exercises, 24

2 Healthcare Workforce Planning....................................................... 27 Thomas C. Ricketts, III, PhD

Learning Objectives, 27; Introduction, 27; The History of Healthcare Workforce Planning, 29; The Rationale for Healthcare Workforce Planning, 31; Overview of Workforce Planning Methodologies, 32; Challenges and Difficulties of Workforce Planning, 37; International Perspectives, 38; Workforce Supply Metrics, 40; Summary, 40; Discussion Questions, 41; Experiential Exercise, 41

3 Globalization and the Healthcare Workforce ................................... 47 Leah E. Masselink

Learning Objectives, 47; Introduction, 47; History and Current Trends, 48; Causes of International Migration, 50; Sending Country/Region Trends, 50; Consequences for Receiving Countries, 53; Issues for Managers, 58; The Future of International Health Workforce Migration, 64; Summary, 65; Discussion Questions, 66; Experiential Exercise, 66

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4 Healthcare Professionals.................................................................. 71 Kenneth R. White, PhD, FACHE; Dolores G. Clement, DrPH, FACHE; and Kristie G. Stover, PhD

Learning Objectives, 71; Introduction, 71; Professionalization, 72; Healthcare Professionals, 74; Considerations for Human Resources Management, 86; Changing Nature of the Health Professions, 88; Summary, 94; Discussion Questions, 94; Experiential Exercise, 95

5 The Legal Environment of Human Resources Management ............ 99 Beverly L. Rubin, JD, and Bruce J. Fried, PhD

Learning Objectives, 99; Introduction, 100; Employment Laws, 102; Employment Discrimination, 104; Equal Employment Opportunity Legislation, 106; Implementing EEO Principles, 114; Employment-at- Will Principle and Its Exceptions, 128; Termination Procedures, 132; Grievance Procedures, 135; Other Employment Issues, 136; Summary, 137; Discussion Questions, 138; Experiential Exercises, 139

6 Workforce Diversity ...................................................................... 145 Rupert M. Evans, Sr., DHA, FACHE

Learning Objectives, 145; Introduction, 145; A Definition of Diversity, 146; The Business Case for Diversity, 148; Diversity in Healthcare Leadership: Two Major Studies, 151; The Impact of Diversity on Care Delivery, 155; Components of an Effective Diversity Program, 157; Summary, 159; Discussion Questions, 159; Experiential Exercise, 160

7 Job Analysis and Job Design.......................................................... 163 Myron D. Fottler, PhD

Learning Objectives, 163; Introduction, 163; Definitions, 164; The Job Analysis Process, 165; Job Design, 178; Specialization in Healthcare, 178; Summary, 184; Discussion Questions, 185; Experiential Exercises, 186; Appendix A, 189

8 Recruitment, Selection, and Retention .......................................... 197 Bruce J. Fried, PhD, and Michael Gates, PhD

Learning Objectives, 197; Introduction, 197; Recruitment, 198; Selection, 210; Turnover and Retention, 224; Summary, 229; Discussion Questions, 229; Experiential Exercises, 230

9 Organizational Development and Training .................................... 237 Rita Quinton, SPHR

Learning Objectives, 237; Introduction, 237; Designing Training for Sustainability, 239; Training Methods, 244; Employee Socialization, 245; Succession Planning, 247; Trends in Organizational Development and

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Training, 249; Summary, 251; Discussion Questions, 251; Experiential Exercises, 252

10 Performance Management ............................................................ 257 Bruce J. Fried, PhD

Learning Objectives, 257; Introduction, 257; The Role of Performance Management, 261; The Cynicism About Performance Management, 271; Conducting Effective Performance Management Interviews, 274; Summary, 277; Discussion Questions, 277; Experiential Exercise, 278

11 Compensation Practices, Planning, and Challenges........................ 281 Howard L. Smith, PhD; Bruce J. Fried, PhD; Derek van Amerongen, MD; and John D. Laughlin

Learning Objectives, 281; Introduction, 281; The Strategic Role of Compensation Policy, 283; Intrinsic Versus Extrinsic Rewards, 287; Determining the Monetary Value of Jobs, 292; Variable Compensation, 297; Special Considerations for Compensating Physicians, 303; Future Directions for Physician Compensation, 311; Summary, 314; Discussion Questions, 314; Experiential Exercises, 315

12 Employee Benefits ........................................................................ 319 Dolores G. Clement, DrPH, FACHE; Maria A. Curran; and Sharon L. Jahn, CEBS, CMS

Learning Objectives, 319; Introduction, 319; Brief Historical Background, 321; Major Federal Legislation, 324; Overview of Employment Benefits, 325; Designing a Benefits Plan, 341; Summary, 344; Discussion Questions, 345; Experiential Exercise, 345

13 Health Safety and Preparedness ..................................................... 347 William Gentry

Learning Objectives, 347; Introduction, 347; Hazard Analysis for a Healthy and Safe Workplace, 348; Preparedness for Workplace Disasters, 350; Safety and Preparedness Requirements, 353; Measuring Workplace Safety and Preparedness, 354; Summary, 355; Discussion Questions, 356; Experiential Exercise, 356

14 Managing with Organized Labor .................................................. 359 Donna Malvey, PhD

Learning Objectives, 359; Introduction, 359; Overview of Unionization, 361; The Labor Relations Process, 362; A Review of Legislative and Judicial Rulings, 372; Developments in Organizing Healthcare Workers, 378; Management Guidelines, 383; Summary, 384; Discussion Questions, 385; Experiential Exercises, 385

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15 Nurse Workload, Staffing, and Measurement................................. 393 Cheryl B. Jones, PhD, RN, and George H. Pink, PhD

Learning Objectives, 393; Introduction, 393; Types of Nursing Personnel, 394; Definitions and Measurement, 396; Measurement of Nurse Staffing, 401; Key Issues in Managing Nurse Staffing and Workload, 406; Future Directions and Challenges, 417; Summary, 419; Discussion Questions, 420; Experiential Exercises, 420; Appendix B, 428

16 Human Resources Budgeting and Employee Productivity ............. 433 Eileen F. Hamby, DBA

Learning Objectives, 433; Introduction, 433; Linking Budgeting with Human Resources Management, 434; Linking Human Resources Budgeting to Employee Productivity, 439; Other HR Practices Related to the Labor Budget, 442; Using Labor Budget Metrics for Measurement, 445; Mergers, Acquisitions, and Strategic Alliances, 447; Summary, 447; Discussion Questions, 448; Experiential Exercises, 448

17 Creating Customer-Focused Healthcare Organizations Through Human Resources .......................................................... 451 Myron D. Fottler, PhD, and Robert C. Ford, PhD

Learning Objectives, 451; Introduction, 451; An Emerging Customer Focus, 453; The New Paradigm, 459; Summary, 473; Discussion Questions, 474; Experiential Exercises, 474

18 Present Trends that Affect the Future of Human Resources Management and the Healthcare Workforce .................................. 479 Bruce J. Fried, PhD, and Myron D. Fottler, PhD

Learning Objectives, 479; Introduction, 479; Ten Healthcare Trends, 479; SHRM’s Survey Results, 485; Six Overall Challenges in Human Resources Management, 488; Summary, 497; Discussion Questions, 497; Experiential Exercise, 498

Integrative Cases

1 Reduction in Force at Sierra Veterans Affairs Medical Center......... 501 Sarah Huth and Sara Hofstetter

Background, 501; The RIF Order, 501; Process and Implementation, 504; Unexpected News, 507; The Outcome, 508; Discussion Questions, 508

2 Management Challenges of a Customer Service Center ................. 511 Andy Garrard and Heather Grant

Background, 511; Imaging Customer Service Center, 511; The Situation, 513; Initial ICSC Assessment, 515; Process Review, 517;

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Personnel Review, 519; Information Technology Review, 521; The Ultimatum, 521; Discussion Questions, 522

3 Performance Feedback Now and Then.......................................... 523 Lee Ellis, Dawn Morrow, and Adia Bradley

Introduction, 523; Background, 523; Current Situation, 525; Ms. Kopalski’s Performance, 527; Discussion Questions, 528

Index................................................................................................... 529

About the Editors ............................................................................... 537

About the Contributors ...................................................................... 538

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FOREWORD

uman resources management is one of the most dynamic and reward- ing responsibilities in healthcare delivery. Because a healthcare organi- zation cannot exist without the people who provide care, both directly

and indirectly, recruitment and retention of staff are critical. A healthcare organ- ization can only be as competent and quality-focused as its employees, physi- cians, leaders, and volunteers. To ensure the delivery of safe patient care, recruit- ment and retention of a highly skilled and qualified workforce are essential and must be a top priority.

Today’s healthcare organizations face many challenges, including sig- nificant shortages of physicians; nurses; respiratory therapists; radiologic, car- diovascular, and medical technologists; physical and occupational therapists; physician assistants; and nurse practitioners. Making recruitment particularly imperative is the fact that the population is aging and will be leaving the work- force in large numbers; consequently, more healthcare services will be de- manded in the years ahead. Never before has it been so important for health- care leaders and managers to understand employee satisfiers.

“Workforce development” is a relatively new term that refers to the con- tinuing education and training of employees for current, new, and/or changing jobs. Such a program also aims to recruit and prepare students for the jobs of the future. Healthcare organizations that do not have a strong, committed workforce development program and/or a partnership with local high schools, colleges, and universities will find themselves grossly understaffed in the com- ing years. In addition, healthcare organizations must help the educational institutions in their communities to solve problems such as limited classroom capacity, inability to fill instructor vacancies, aging instructors, and long wait- ing lists of qualified students for allied health and nursing programs.

For the first time ever, people from four different generations are work- ing together. Traditionalists, baby boomers, generation Xers, and millennials have differing work needs and expectations, challenging those who manage them to find appropriate ways to motivate, satisfy, reward, and recognize each group. The core values of one generation are also different from the other, so no longer will a one-size-fits-all approach to employee programs suffice. One theme that is common among members of these generations is the pursuit of

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work–life balance. No longer are employees interested in devoting their lives to their jobs. Time for friends, family, and self has become a significant worker value, making flexible work scheduling a must in contemporary organizations.

Workforce diversity and inclusion is another area of great challenge. There is fierce competition for talent with diverse backgrounds, and putting together a workforce that is diverse in culture, knowledge, perspective, and style is not easy. Many advances toward greater inclusion have been made, but major distances still need to be covered before the healthcare workforce can truly reflect the U.S. society as a whole.

Competitive compensation and benefit programs are especially essen- tial in this tight labor market. Of even greater importance is ensuring that these programs motivate or provide an incentive to employees to achieve op- timal performance. Performance management systems must be designed to clearly articulate expectations and to appropriately reward performance.

A recent addition to human resources challenges is disaster prepared- ness, and nowhere is this more important than in a healthcare organization. In the midst of a disaster, healthcare providers must be able to continue, and even expand, operations and services for their communities. At the same time, they must recognize and respond to the personal needs of their own staff, many of whom will be required to work during catastrophic events. Success- ful healthcare organizations are ready, willing, and able to respond when un- foreseen circumstances occur, and they will occur.

Healthcare organizations have tremendous opportunities to recruit, re- tain, develop, and coach their workforce when reimbursement and other fi- nancial pressures are high. That is the time to be strategic and to make solid cost–benefit human resources decisions that support the organization’s finan- cial goals as well as the long-term ability to staff with highly qualified individ- uals. Although getting caught up in day-to-day problem solving is easy, quick fixes cannot address long-term issues.

Human resources management and strategic planning should mirror the strategic priorities and goals of the organization. Positive outcomes in hu- man resources metrics are essential to financial health, patient satisfaction, and the ability to achieve goals each year.

This book provides a comprehensive discussion of these and other top- ics related to strategic human resources management. Whether you work in human resources specifically or management in general, you must understand and appreciate the connection between a positive workforce culture and out- standing patient care delivery. Human resources issues are complex, and the answers are not simple. Therefore, human resources thinking, planning, and execution must be strategic.

William K. Atkinson, PhD, president and chief executive officer, WakeMed Health & Hospitals,

Raleigh, North Carolina

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PREFACE

hange has become a staple of the healthcare system. It is omnipresent in our discussions about healthcare: A Google search for “healthcare change” yields more than 17 million results. In the previous edition of this book, we made the observation that

healthcare has undergone major transformations as a result of advances in technology, availability of information, and new forms of organizations and fi- nancing mechanisms. To this list we add the emerging impact of globalization not just on healthcare but also on the healthcare workforce, greater awareness of natural and man-made threats, and increased recognition of possible severe labor shortages because of the aging of the population and aging of the healthcare workforce.

An oft-repeated maxim is that “change creates opportunity.” In the present healthcare environment, change inspires feelings of uncertainty. How- ever, it does offer opportunities for honest people who seek solutions to healthcare problems, some of which have little precedent in terms of type or scope. This environment also creates opportunities for opportunists who, like snake-oil salesmen of days past, tempt us with quick fixes. Some of these fixes are merely repackaged and relabeled old strategies that are marketed effec- tively to a public desperate for new answers. Many of these fixes have little or no empirical support, but they are strongly promoted by “heroes of manage- ment.” Simply turn your attention to the business section of any bookstore to see the array of fixes for sale.

Pfeffer and Sutton’s (2006) book, Hard Facts, Dangerous Half-Truths, and Total Nonsense, provides an enlightening and amusing picture of the friv- olous, trendy nature of the management book market. Even the titles of these books read like fads, even contradictory: Love Is the Killer App: How to Win Business and Influence Friends and Business Is Combat: A Fighter Pilot’s Guide to Winning in Modern Business Warfare. With a few exceptions, the half-life of this genre of management “literature” is overall short but sufficiently long for its authors and publishers to reap a handsome profit and for business fol- lowers to jump on the next “revolutionary” method.

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This new edition of Human Resources in Healthcare takes the approach supported by Pfeffer and Sutton and by responsible leaders in the healthcare industry who advocate the use of evidence in management and clinical work. In a recent JAMA article, Shortell, Rundall, and Hsu make an eloquent case for linking evidence-based medicine (EBM) and evidence-based management (EBMgt) to improve quality of care:

Until both components are in place—identifying the best content (i.e., EBM) and applying it within effective organizational contexts (i.e., EBMgt)—consistent, sus- tainable improvement in the quality of care received by US residents is unlikely to occur (Shortell, Rundall, and Hsu 2007, 673).

Evidence-based management practices do not always have the shelf ap- peal of popular business methods contained in books sold at mall shops. How- ever, such practices are robust and long-standing, owing to the fact that they have empirical support, have led to a sustained record of success, and have been designated as best practices. This edition, like the last two editions, is filled with concepts and strategies that have, over the years, been repeatedly tested and refined by practicing leaders and managers in actual organizations.

A word about the general concept of management is in order, however. The success of management practices is considerably less certain than, for ex- ample, the well-proven effectiveness of the measles vaccine. After all, clinical trials are hard to come by in management. What works in management and human resources management often depends on a myriad of factors, codified in organizational contingency theories. This fact does not make our manage- ment theories, research findings, and practices invalid, however. In medicine, we know that patients with the same disease respond very differently to the same medication, but we do not yet fully understand why that is the case and we cannot yet personalize medications to the unique characteristics of the in- dividual. The same idea applies to management.

In light of this, our humble advice is for managers at all organizational levels to be aware of the unique contingent factors that may have an impact on the effectiveness of any recommended practice or strategy. We accept the fact that many people in our impatient society will be less than satisfied with strategies that do not work in every circumstance, every time. But then again, those people are more likely to purchase books at their local mall.

While we hope that this book imparts evidence-based knowledge, we also realize that having this knowledge alone does not guarantee that even the most studious reader will become an effective manager. We certainly would not expect someone who only carefully read and absorbed medical textbooks, but who never actually performed the procedures and obtained feedback, to perform any type of surgery, let alone a successful one. The point is that effectiveness takes a considerable amount of learning, practice, and time. Being an expert manager means getting to the point where book

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knowledge becomes intuitive and decisions are guided by this intuition. It is no wonder that the archetype of the wise old man or woman can be found across cultures.

Having said this, we encourage readers to supplement the empirical strategies and tools presented in this book with competency-building activities.

Book Overview

We have substantially revised the content of this book in our continuing ef- forts to impart, and keep up with, the knowledge base required to be compe- tent in healthcare human resources management. This edition includes three new chapters:

• Chapter 3 • Chapter 9 • Chapter 12

In addition, the book contains three extensive cases that emphasize that human resources management goes beyond its own function and extends to other aspects of the organization.

Without exception, all other chapters have been expanded, updated, and improved. The new authors and coauthors in this edition not only further enrich the content but also add to the healthy mix of educators and practition- ers who contributed to this book.

Chapters Chapter 1, by Myron Fottler, explores strategic human resources manage- ment. For many years, the human resources function was synonymous with handling “personnel” and had a reputation for being passive and at times ob- structionist in its relationship with internal customers. This chapter presents a progressive approach to human resources management that links human re- sources practices with organizational mission, strategies, and goals.

Chapter 2, by Tom Ricketts, offers an overview of human resources planning from a societal or national perspective. The chapter provides the reader with an appreciation of the regional, national, and global context of hu- man resources planning and management.

Chapter 3, by Leah Masselink, discusses the increasing global mobility of healthcare professionals and its effects on the workforce and healthcare quality in this country and abroad. The chapter helps the reader consider the logistical and ethical challenges of this issue.

Chapter 4, by Kenneth White, Dolores Clement, and Kristie Stover, takes the reader through the world of various healthcare professions. This chapter lays out the functions, educational preparation, licensure requirements,

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changing roles, and management implications of those who directly provide and those who support the delivery of healthcare.

Chapter 5, by Beverly Rubin and Bruce Fried, is a guide in the vast le- gal environment surrounding healthcare human resources. Among other top- ics, the chapter addresses employee rights, discipline and privacy, sexual ha- rassment, and equal employment opportunity.

Chapter 6, by Rupert Evans, focuses on the subject of societal and workforce diversity. This chapter gives a much-needed clarification on the meaning and application of diversity in healthcare organizations, pointing out that the term involves considerably more than a person’s race and ethnicity.

Chapter 7, by Myron Fottler, brings us into, perhaps, the most critical foundational concept in human resources management: job analysis. The chapter explains the processes of and useful approaches to conducting a job analysis, creating job descriptions, and writing job specifications. Fottler con- tends that the deliberate structuring of work can lead to improved individual, group, and organizational performance.

Chapter 8, by Bruce Fried and Michael Gates, deals with recruitment, selection, and retention. In this edition, the chapter expands its coverage of retention, presenting recent evidence on the effectiveness of alternative reten- tion strategies and discussing the costs of turnover.

Chapter 9, by Rita Quinton, offers useful, practical advice on designing and evaluating employee-training activities. The chapter is a comprehensive treatment of the many aspects of developing a training program that works.

Chapter 10, by Bruce Fried, describes a variety of approaches for man- aging employee performance, including providing feedback and building strategies for improvement. Fried emphasizes that for performance manage- ment to be effective, it needs to be viewed as positive rather than punitive and likely requires a change in organizational mind-set.

Chapter 11, by Howard Smith, Bruce Fried, Derek van Amerongen, and John Laughlin, is a comprehensive treatment of the issue of compensa- tion, including balancing internal equity and external competitiveness and the conflicts that can arise within different compensation models.

Chapter 12, by Dolores Clement, Maria Curran, and Sharon Jahn, at- tends to a critical topic that was sorely missing in earlier editions: employee benefits. In this chapter, the authors dissect the aspects of employee benefits, including the history, current practices and challenges, budgetary implications, and benefits administration.

Chapter 13, by William Gentry, explores the issues of health and safety in the healthcare workplace. This chapter has been expanded to include disas- ter preparedness and disaster management.

Chapter 14, by Donna Malvey, covers labor relations and unioniza- tion. The chapter presents new information, including recent rulings that

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have direct relevance to healthcare. Malvey notes that the healthcare field and the public sector remain the two major targets for unionization in the United States.

Chapter 15, by Cheryl Jones and George Pink, is a broad discussion of nurse workload and measurement. The chapter addresses topics such as pa- tient classification systems, evidence on the relationship between nurse work- load and the quality of care, and nurse workload and nurse shortages. New ex- ercises are included as well to stimulate thinking and discussion.

Chapter 16, by Eileen Hamby, concentrates on human resources budg- eting and employee productivity. This chapter is particularly relevant today given the increased attention to using metrics in human resources manage- ment. Elements of a labor budget are described, and the controversial ques- tion of outsourcing is broken down and analyzed.

Chapter 17, by Myron Fottler and Robert Ford, emphasizes customer focus and the role of human resources in creating and maintaining a customer- focused organization. The chapter defines practical strategies to more closely align human resources systems with a customer-focused vision.

Chapter 18, by Bruce Fried and Myron Fottler, examines current and future societal and healthcare trends that have (and will have) implications for the healthcare workforce and human resources management. The authors posit that, in the face of challenges, human resources managers will need not only to play an active role as a strategic partner to the organization but also to be inquisitive, creative, and communicative about how human resources can best respond to these issues.

Cases This edition also includes three integrative cases. Taking the perspective that human resources management is not confined to the “human resources silo,” these cases challenge the reader to consider the larger environment of the or- ganization when addressing human resources issues. Based on real situations, these cases analyze three different levels: the organization, the department, and the individual.

Case 1, by Sarah Huth and Sara Hofstetter, surrounds a downsizing ef- fort at a VA facility and raises important questions about the many pitfalls of organizational reorganization.

Case 2, by Andy Garrard and Heather Grant, discusses a radiology de- partment’s struggle with its customer service role. The case involves the com- plex interplay among organizational trust, process improvement, organiza- tional conflict, and technological change.

Case 3, by Lee Ellis, Dawn Morrow, and Adia Bradley, addresses the complex process of performance feedback and the difficult human issues that arise in providing feedback to employees.

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Acknowledgments

Bruce Fried First and foremost, I thank all of the authors who contributed to this book. All of them willingly and generously shared their knowledge and time. Thanks to staff at Health Administration Press—to Audrey Kaufman for humanely keeping us on schedule, and to Jane Calayag for her thoughtful and very help- ful editing. I always appreciate the leadership of Peggy Leatt and Laurel Files in the Department of Health Policy and Administration at UNC. Together, Peggy and Laurel sustain a culture that encourages and nurtures innovation while challenging us always to look at the evidence.

I thank my children—Noah, Shoshana, and Aaron—who allow me to live vicariously through their growth. I also thank my parents, who have al- ways supported my efforts, even when they are not quite certain how exactly I spend my time. Of course, I extend my gratitude to my wife, Nancy, who consistently provides me with tremendous emotional and intellectual support whether I think I need it or not.

Myron Fottler Thanks to Megan McLendon, a student assistant and MHA student at the University of Central Florida. Her assistance and patience with typing various versions of my chapters, facilitating communications with editorial colleagues and other authors, and finding appropriate and relevant materials for updat- ing chapters were invaluable and very much appreciated. My gratitude also goes to my wife, Carol, for her support on this and other projects over the years. Finally, I thank Aaron Liberman, chair of the Department of Health Ad- ministration and Informatics at the University of Central Florida, for his sup- port of this project.

Bruce J. Fried, PhD University of North Carolina at Chapel Hill

Myron D. Fottler, PhD University of Central Florida

References

Pfeffer, J., and R. I. Sutton. 2006. Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management. Boston: Harvard Business School Press.

Shortell, S. M., T. G. Rundall, and J. Hsu. 2007. “Improving Patient Care by Linking Evidence-Based Medicine and Evidence-Based Management.” JAMA 298 (6): 673–76.

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STRATEGIC HUMAN RESOURCES MANAGEMENT

Myron D. Fottler, PhD

CHAPTER

1

1

Learning Objectives

After completing this chapter, the reader should be able to

• define strategic human resources management, • outline key human resources functions, • discuss the significance of human resources management to present and

future healthcare executives, and • describe the organizational and human resources systems that affect

organizational outcomes.

Introduction

Like most other service industries, the healthcare industry is very labor inten- sive. One reason for healthcare’s reliance on an extensive workforce is that it is not possible to produce a “service” and then store it for later consumption. In healthcare, the production of the service that is purchased and the con- sumption of that service occur simultaneously. Thus, the interaction between healthcare consumers and healthcare providers is an integral part of the deliv- ery of health services. Given the dependence on healthcare professionals to deliver service, the possibility of heterogeneity of service quality must be rec- ognized within an employee (as skills and competencies change over time) and among employees (as different individuals or representatives of various pro- fessions provide a service).

The intensive use of labor for service delivery and the possibility of vari- ability in professional practice require that the attention of leaders in the in- dustry be directed toward managing the performance of the persons involved in the delivery of services. The effective management of people requires that healthcare executives understand the factors that influence the performance of individuals employed in their organizations. These factors include not only the traditional human resources management (HRM) activities (i.e., recruitment

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and selection, training and development, appraisal, compensation, and em- ployee relations) but also the environmental and other organizational aspects that impinge on human resources (HR) activities.

Strategic human resources management (SHRM) refers to the compre- hensive set of managerial activities and tasks related to developing and main- taining a qualified workforce. This workforce, in turn, contributes to organi- zational effectiveness, as defined by the organization’s strategic goals. SHRM occurs in a complex and dynamic milieu of forces within the organizational context. A significant trend that started within the last decade is for HR man- agers to adopt a strategic perspective of their job and to recognize critical link- ages between organizational strategy and HR strategies (Fottler et al. 1990; Greer 2001).

This book explains and illustrates the methods and practices for increas- ing the probability that competent personnel will be available to provide the services delivered by the organization and that these employees will appropri- ately perform the necessary tasks. Implementing these methods and practices means that requirements for positions must be determined, qualified persons must be recruited and selected, employees must be trained and developed to meet future organizational needs, and adequate rewards must be provided to attract and retain top performers. All of these functions must be managed within the legal constraints imposed by society (i.e., legislation, regulation, and court decisions). This chapter emphasizes that HR functions are per- formed within the context of the overall activities of the organization. These functions are influenced or constrained by the environment, the organiza- tional mission and strategies that are being pursued, and the systems indige- nous to the institution.

Why study SHRM? How does this topic relate to the career interests or aspirations of present or future healthcare executives? Staffing the organ- ization, designing jobs, building teams, developing employee skills, identi- fying approaches to improve performance and customer service, and re- warding employee success are as relevant to line managers as they are to HR managers. A successful healthcare executive needs to understand human be- havior, work with employees effectively, and be knowledgeable about nu- merous systems and practices available to put together a skilled and moti- vated workforce. The executive also has to be aware of economic, technological, social, and legal issues that facilitate or constrain efforts to at- tain strategic objectives.

Healthcare executives do not want to hire the wrong person, to expe- rience high turnover, to manage unmotivated employees, to be taken to court for discrimination actions, to be cited for unsafe practices, to have poorly trained staff undermine patient satisfaction, or to commit unfair labor prac- tices. Despite their best efforts, executives often fail at HRM because they hire

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the wrong people or they do not motivate or develop their staff. The material in this book can help executives avoid mistakes and achieve great results with their workforce.

Healthcare organizations can gain a competitive advantage over com- petitors by effectively managing their human resources. This competitive ad- vantage may include cost leadership (i.e., being a low-cost provider) and prod- uct differentiation (i.e., having high levels of service quality). A 1994 study examined the HRM practices and productivity levels of 968 organizations across 35 industries (Huselid 1994). The effectiveness of each organization’s HRM practices was rated based on the presence of such benefits as incentive plans, employee grievance systems, formal performance appraisal systems, and employee participation in decision making. The study found that organiza- tions with high HRM effectiveness ratings clearly outperformed those with low HRM rankings. A similar study of 293 publicly held companies reported that productivity was highly correlated with effective HRM practices (Huselid, Jackson, and Schuler 1997).

Based on “extensive reading of both popular and academic literature, talking with numerous executives in a variety of industries, and an application of common sense,” Jeffrey Pfeffer (1998) identifies in his book, The Human Equation, the seven HRM practices that enhance an organization’s competi- tive advantage. These practices seem to be present in organizations that are ef- fective in managing their human resources, and they occur repeatedly in studies of high performing organizations. In addition, these themes are interrelated and mutually reinforcing; it is difficult to achieve positive results by imple- menting just one practice on its own. See Figure 1.1 for a list of the seven HRM themes relevant to healthcare. While these HR practices generally have a positive impact on organizational performance, their relative effectiveness may also vary depending on their alignment (or lack thereof) with each other and with the organizational mission, values, culture, strategies, goals, and ob- jectives (Ford et al. 2006).

The bad news about achieving competitive advantage through the workforce is that it inevitably takes time to accomplish (Pfeffer 1998). The good news is that, once achieved, this type of competitive advantage is likely to be more enduring and more difficult for competitors to duplicate. Mea- surement is a crucial component for implementing the seven HR practices listed in Figure 1.1. Failure to evaluate the impact of HR practices dooms these practices to second-class status, neglect, and potential breakdown. Feed- back from such measurement is essential in further development of or changes to practices as well as in monitoring how each practice is achieving its intended purpose.

Most of these HR practices are described in more detail throughout the book. Although the evidence presented in the literature shows that effective

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HRM practices can strongly enhance an organization’s competitive advan- tage, it fails to indicate why these practices have such an influence. In this chapter, we describe a model—the SHRM—that attempts to explain this phe- nomenon. First, however, a discussion of environmental trends is in order.

Environmental Trends

Among the major environmental trends that affect healthcare institutions are changing financing arrangements, emergence of new competitors, advent of new technology, low or declining inpatient occupancy rates, changes in physician– organization relationships, transformation of the demography and increase in

4 H u m a n R e s o u r c e s i n H e a l t h c a r e

FIGURE 1.1 Seven HRM Practices for

Effective Healthcare

Organizations

1. Provide employment security. Employees can be fired if they do not perform, but they should not be put on the street quickly because of economic down- turns or strategic errors by senior management over which employees have no control. An example that Pfeffer frequently cites is Southwest Airlines, which sees job security as a vital tool for building employee partnership and argues that short-term layoffs would “put our best assets, our people, in the arms of the competition.”

2. Use different criteria to select personnel. Companies should screen for cultural fit and attitude, among other things, rather than just for skills that new employees can easily acquire through training.

3. Use self-managed teams and decentralization as basic elements of organizational de- sign. Pfeffer is particularly keen on the way teams can substitute peer-based con- trol of work for hierarchical control, thereby allowing for the elimination of man- agement layers.

4. Offer high compensation contingent on organizational performance. High pay can produce economic success, as illustrated by the story of Pathmark. This large gro- cery store chain in the eastern United States had three months to turn the com- pany around or go bust. The new boss increased the salaries of his store managers by 40 percent to 50 percent, enabling managers to concentrate on improving per- formance rather than complain about their pay.

5. Train extensively. Pfeffer notes that this activity “begs for some sort of return-on- investment calculations” but concludes that such analyses are difficult, if not im- possible, to carry out. Successful companies that emphasize training do so almost as a matter of faith.

6. Reduce status distinctions and barriers. These include dress, language, office arrange- ments, parking, and wage differentials.

7. Share financial and performance information. The chief executive officer of Whole Foods Market has said that a high-trust organization “can’t have secrets.” His com- pany shares salary information with every employee who is interested.

SOURCE: Pfeffer (1998)

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diversity of the workforce, shortage of capital, increasing market penetration by managed care, heightened pressures to contain costs, and greater expecta- tions of patients. The results of these trends have been increased competition, the need for higher levels of performance, and concern for institutional sur- vival. Many healthcare organizations are closing facilities; undergoing corpo- rate reorganization; instituting staffing freezes and/or reductions in work- force; allowing greater flexibility in work scheduling; providing services despite fewer resources; restructuring and/or redesigning jobs; outsourcing many functions; and developing leaner management structures, with fewer levels and wider spans of control.

Organizations are pursuing various major competitive strategies to re- spond to the current turbulent healthcare environment, including offering low-cost health services, providing superior patient service through high- quality technical capability and customer service, specializing in key clinical ar- eas (e.g., becoming centers of excellence), and diversifying within or outside healthcare (Coddington and Moore 1987). In addition, organizations are en- tering into strategic alliances (Kaluzny, Zuckerman, and Ricketts 1995) and restructuring their organizations in various ways. Regardless of which strate- gies are being pursued, all healthcare organizations are experiencing a de- crease in staffing levels in many traditional service areas and an increase in staffing in new ventures, specialized clinical areas, and related support services (Wilson 1986).

Staffing profiles in healthcare today are characterized by a limited num- ber of highly skilled and well-compensated professionals. Healthcare organi- zations are no longer “employers of last resort” for the unskilled. At the same time, however, most organizations are experiencing shortages of various nurs- ing and allied health personnel.

The development of appropriate responses to the ever-changing healthcare environment has received so much attention that HRM planning is now well accepted in healthcare organizations. However, implementation of such plans has often been problematic. The process often ends with the development of goals and objectives and does not include strategies or meth- ods of implementation and ways to monitor results. Implementation appears to be the major difficulty in the overall management process (Porter 1980).

A major reason for this lack of implementation has been failure of healthcare executives to assess and manage the various external, interface, and internal stakeholders whose cooperation and support are necessary to success- fully implement any business strategy (i.e., corporate, business, or functional) (Blair and Fottler 1990). A stakeholder is any individual or group with a “stake” in the organization. External stakeholders include patients and their families, public and private regulatory agencies, and third-party payers. Inter- face stakeholders are those who operate on the “interface” of the organization

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in both the internal and external environments; these stakeholders may in- clude members of the medical staff who have admitting privileges or who are board members at several institutions. Internal stakeholders are those who op- erate within the organization, such as managers, professionals, and nonprofes- sional employees.

Involving supportive stakeholders, such as employees and HR man- agers, is crucial to the success of any HRM plan. If HR executives are not ac- tively involved, then employee planning, recruitment, selection, development, appraisal, and compensation necessary for successful plan implementation are not likely to occur. McManis (1987, 19) notes that “[w]hile many hospitals have elegant and elaborate strategic plans, they often do not have support- ing human resource strategies to ensure that the overall corporate plan can be implemented. But strategies don’t fail, people do.” Despite this fact, the healthcare industry as a whole spends less than one-half the amount that other industries are spending on human resources management (Hospitals 1989).

The SHRM Model

A strategic approach to human resources management includes the following (Fottler et al. 1990):

• Assessing the organization’s environment and mission • Formulating the organization’s business strategy • Identifying HR requirements based on the business strategy • Comparing the current HR inventory—in terms of numbers,

characteristics, and practices—with future strategic requirements • Developing an HR strategy based on the differences between the current

inventory and future requirements • Implementing the appropriate HR practices to reinforce the business

strategy and to attain competitive advantage

Figure 1.2 provides some examples of possible linkages between strate- gic decisions and HRM practices.

SHRM has not been given as high a priority in healthcare as it has re- ceived in many other industries. This neglect is particularly surprising in a la- bor-intensive industry that requires the right people in the right jobs at the right times and that often undergoes shortages in various occupations (Cerne 1988). In addition, the literature in the field offers fairly strong evidence that organizations that use more progressive HR approaches achieve significantly better financial results than comparable, although less progressive, organiza- tions do (Gomez-Mejia 1988; Huselid 1994; Huselid, Jackson, and Schuler 1997; Kravetz 1988).

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Figure 1.3 illustrates some strategic HR trends that affect job analysis and planning, staffing, training and development, performance appraisal, compensation, employee rights and discipline, and employee and labor rela- tions. These trends are discussed in more detail in later chapters in this book. The bottom line of Figure 1.3 is that organizations are moving to higher lev- els of flexibility, collaboration, decentralization, and team orientation. This transformation is driven by the environmental changes and the organizational responses to those changes discussed earlier.

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Strategic Decision Implications on HR Practices

Pursue low-cost competitive Provide lower compensation strategy Negotiate give-backs in labor

relations Provide training to

improve efficiency

Pursue service-quality Provide high compensation differentiation competitive Recruit top-quality candidates strategy Evaluate performance on the

basis of patient satisfaction Provide training in guest

relations

Pursue growth through Adjust compensation acquisition Select candidates from

acquired organization Outplace redundant

workers Provide training to new

employees

Pursue growth through Promote existing employees development of new markets on the basis of an objective

performance-appraisal system

Purchase new technology Provide training in using and maintaining the technology

Offer new service/product line Recruit and select physicians and other personnel

Increase productivity and cost Encourage work teams to be effectiveness through process innovative improvement Take risks

Assume a long-term perspective

FIGURE 1.2 Implications of Strategic Decisions on HR Practices

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FIGURE 1.3 Strategic Human

Resources Trends

Old HR Practices Current HR Practices

Job Analysis/Planning Explicit job descriptions Broad job classes Detailed HR planning Loose work planning Detailed controls Flexibility Efficiency Innovation

Staffing Supervisors make hiring decisions Team makes hiring decisions Emphasis on candidate’s technical Emphasis on “fit” of applicant

qualifications within the culture Layoffs Voluntary incentives to retire Letting laid-off workers fend for Providing continued support

themselves to terminated employees

Training and Development Individual training Team-based training Job-specific training Generic training emphasizing

flexibility “Buy” skills by hiring experienced “Make” skills by training

workers less-skilled workers Organization responsible for Employee responsible for

career development career development

Performance Appraisal Uniform appraisal procedures Customized appraisals Control-oriented appraisals Developmental appraisals Supervisor inputs only Appraisals with multiple inputs

Compensation Seniority Performance-based pay Centralized pay decisions Decentralized pay decisions Fixed fringe benefits Flexible fringe benefits

(i.e., cafeteria approach)

Employee Rights and Discipline Emphasis on employer protection Emphasis on employee

protection Informal ethical standards Explicit ethical codes and

enforcement procedures Emphasis on discipline to reduce Emphasis on prevention to

mistakes reduce mistakes

Employee and Labor Relations Top-down communication Bottom-up communication

and feedback Adversarial approach Collaboration approach Preventive labor relations Employee freedom of choice

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The SHRM Process As illustrated in Figure 1.4, a healthcare organization is made up of systems that require constant interaction within the environment. To remain viable, an organization must adapt its strategic planning and thinking to extend to external changes. The internal components of the organization are affected by these changes, so the organization’s plans may necessitate modifications in terms of the internal systems and HR process systems. There must be har- mony among these systems.

The characteristics, performance levels, and amount of coherence in operating practices among these systems influence the outcomes achieved in terms of organizational and employee-level measures of performance. HR goals, objectives, process systems, culture, technology, and workforce must be aligned with each other (i.e., internal alignment) and with various levels of or- ganizational strategies (i.e., external alignment) (Ford et al. 2006).

Internal and External Environmental Assessment Environmental assessment is a crucial element of SHRM. As a result of changes in the legal/regulatory climate, economic conditions, and labor-market real- ities, healthcare organizations face constantly changing opportunities and threats. These opportunities and threats make particular services or markets more or less attractive in the organization’s perspective.

Among the trends currently affecting the healthcare environment are increasing diversity of the workforce, aging of the workforce, labor shortages, changing worker values and attitudes, and advances in technology. Healthcare executives have responded to these external environmental pressures through various internal, structural changes, including developing network structures, joining healthcare systems, participating in mergers and acquisitions, forming work teams, implementing continuous quality improvement, allowing telecom- muting, employee leasing, outsourcing, using more temporary or contingent workers, and globalization.

Healthcare executives need to assess not only their organizational strengths and weaknesses but also their internal systems; human resources’ skills, knowledge, and abilities; and portfolio of service markets. Management of human resources involves paying attention to the effect of environmental and internal components on the HR process. Because of the critical role of healthcare professionals in delivering services, managers should develop HR policies and practices that are closely related to, influenced by, and supportive of the strategic goals and plans of their organization.

Organizations, either explicitly or implicitly, pursue a strategy in their operations. Deciding on a strategy means determining the products or serv- ices that will be created and the markets to which the chosen services will be offered. Once the selection is made, the methods to be used to compete in the

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10 H u m a n R e s o u r c e s i n H e a l t h c a r e

Organizational Mission • Purpose • Mission • Business unit

Organizational Strategy Formulation • Corporate • Business • Functional

HR Outcomes • High levels of competence • High levels of motivation • Positive work-related attitudes • Low employee turnover • Organizational commitment • High levels of satisfaction

Organizational Outcomes • Competitive advantage • Financial performance • Legal compliance • Attainment of strategic goals • Satisfaction of key stakeholders

HR Strategy Implementation • Management

of external and interface stakeholders

• Management of external stakeholders

• HR practices/ tactics to implement (i.e., adequate staffing)

Environmental Assessment • Opportunities • Threats • Services/markets • Technological trends • Legal/regulatory

climate • Economic conditions • Labor markets

HR Strategy Formulation • HR goals and

objectives • HR process systems — HR planning — Job analysis and

job design — Recruitment/

retention — Selection/placement — Training/

development — Performance appraisal — Compensation — Labor relations • Organizational

design/culture • Technology/

information systems • Workforce

Formulation of Other Functional Strategies • Accounting/finance • Marketing • Operations

management

Implementation of other functional

strategies

Internal Assessments • Strengths • Weaknesses • Portfolio of service

markets • Human resources’

skills, knowledge, and abilities

• Internal systems

FIGURE 1.4 SHRM Model

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chosen market must be identified. The methods adopted are based on inter- nal resources available, or potentially available, for use by managers. As shown in Figure 1.4, strategies should consider environmental conditions and orga- nizational capabilities. To be in a position to take advantage of opportunities that are anticipated to occur, as well as to parry potential threats from changed conditions or competitor initiatives, managers must have detailed knowledge of the current and future operating environment. Cognizance of internal strengths and weaknesses allows managers to develop plans based on an accu- rate assessment of the organization’s ability to perform in the marketplace at the desired level.

SHRM does not occur in a vacuum; rather, it occurs in a complex and dynamic constellation of forces in the organizational context. One significant trend has been for HR managers to adopt a strategic perspective and to rec- ognize the critical links between human resources and organizational goals. As seen in Figure 1.4, the SHRM process starts with the identification of the organization’s purpose, mission, and business unit, as defined by the board of directors and the senior management team. The process ends with the HR function serving as a strategic partner to the operating departments. Under this new view of human resources management, the HR manager’s job is to help operating managers achieve their strategic goals by serving as the expert in all employment-related activities and issues.

When HR is viewed as a strategic partner, talking about the single best way to do anything makes no sense. Instead, the organization must adopt HR practices that are consistent with its strategic mission, goals, and objectives. In addition, all healthcare executives are HR managers. Proper management of employees entails having effective supervisors and line managers throughout the organization.

Organizational Mission and Corporate Strategy

An organization’s purpose is its basic reason for existence. The purpose of a hospital may be to deliver high-quality clinical care to the population in a given service area. An organization’s mission, created by its board and senior managers, specifies how the organization intends to manage itself to most ef- fectively fulfill its purpose. The mission statement often provides subtle clues on the importance the organization places on its human resources. The pur- pose and mission affect HR practices in obvious ways. A nursing home, for ex- ample, must employ nursing personnel, nurse aides, and food service workers to meet the needs of its patients.

The first step in formulating a corporate and business strategy is do- ing a SWOT (strengths, weaknesses, opportunities, and threats) analysis. The managers then attempt to use the organization’s strengths to capitalize on

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environmental opportunities and to cope with environmental threats. Hu- man resources play a fundamental role in SWOT analysis because the nature and type of people who work within an organization and the organization’s ability to attract new talent represent significant strengths and weaknesses.

Most organizations formulate strategy at three basic levels: the corpo- rate level, the business level, and various functional levels. Corporate strategy is a set of strategic alternatives that an organization chooses from as it man- ages its operations simultaneously across several industries and markets. Busi- ness strategy is a set of strategic alternatives that an organization chooses from to most effectively compete in a particular industry or market. Functional strategies consider how the organization will manage each of its major func- tions (i.e., marketing, finance, and human resources).

A key challenge for HR managers when the organization is using a cor- porate growth strategy is recruiting and training large numbers of qualified employees, who are needed to provide services in added operations. New-hire training programs may also be needed to orient and update the skills of in- coming employees. In Figure 1.4, the two-way arrows connecting “Organi- zational Strategy Formulation” and “HR Strategy Formulation” indicate that the impact of the HR function should be considered in the initial development of organizational strategy. When HR is a true strategic partner, all organiza- tional parties consult with and support one another.

HR Strategy Formulation and Implementation Once the organization’s corporate and business strategies have been deter- mined, managers can then develop an HR strategy. This strategy commonly includes a staffing strategy (planning, recruitment, selection, placement), a developmental strategy (performance management, training, development, career planning), and a compensation strategy (salary structure, employee in- centives).

A staffing strategy refers to a set of activities used by the organization to determine its future HR needs, recruit qualified applicants with an interest in the organization, and select the best of those applicants as new employees. This strategy should be undertaken only after a careful and systematic devel- opment of the corporate and business strategies so that staffing activities mesh with other strategic elements of the organization. For example, if retrench- ment is part of the business strategy, the staffing strategy will focus on deter- mining which employees to retain and what process to use in termination.