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FottlerMyronDFr_2008_18PresentTrendsThatAf_HumanResourcesInHealt.pdf
PRESENT TRENDS THAT AFFECT THE FUTURE OF HUMAN RESOURCES MANAGEMENT AND THE HEALTHCARE WORKFORCE
Bruce J. Fried, PhD, and Myron D. Fottler, PhD
CHAPTER
18
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Learning Objectives
After completing this chapter, the reader should be able to
• enumerate and discuss the trends that are occurring in the healthcare marketplace, and
• list and explain the challenges in healthcare human resources management.
Introduction
Healthcare human resources management (HRM) operates within a complex external environment. Therefore, when we consider the future of healthcare HRM and the healthcare workforce, we must take into consideration the trends that are specific to the healthcare industry and its workforce, the con- cerns that affect HRM as a whole, and the changes that will have an impact on human resources (HR) functions in the future. These three sets of issues are overlapping and interrelated.
Ten Healthcare Trends
Of all industries, the healthcare industry can easily be considered the most dy- namic and, at least in some respects, the most unpredictable. This unpre- dictability is natural in that healthcare is about people and hence absorbs the changes that happen in all areas of society, including politics, the economy, im- migration, and popular culture. The ten key trends that are expected to cause
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major changes in the healthcare industry, and consequently on its workforce, are examined in this section and summarized in Figure 18.1.
Technological Innovation
One area that is not yet clearly understood but is geared to make an impact on healthcare is genetics. The Human Genome Project reached a turning point in April 2003 when the full human genome sequence was completed. As research continues about the hereditary and genetic factors associated with disease, more details concerning the treatment and management of disease will emerge, raising the question, what kind of education, training, and spe- cialization do physicians and other caregivers need?
Genetic counseling will continue to grow as a field, but how will this profession change as a result of discovery and technological advances? What new types of personnel will be required as the field of human genetics comes out of the laboratory and into the clinical setting? Advances in genetic diag- nosis and treatment likely will require a broad range of professionals in med- ical genetics, gene therapy, organ transplantation, and pharmacogenomics, among others. Demand for personnel in these areas will increase, and demand will continue for researchers in gene sequencing, biotechnology, functional genomics, proteomics, and microbial genetics.
The point here is that not only will personnel in genetics and research be in greater demand but also that jobs will be created in these areas.
Other emerging technologies, including imaging, information tech- nology, and telemedicine, are also poised to make an impact on the healthcare workforce, similarly generating new types of positions and specializations. More unpredictable than the types of jobs that may emerge is the impact of these changes on the structure and functioning of healthcare organizations.
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FIGURE 18.1 Ten Healthcare
Trends
1. Technological innovation
2. Consumer mind-set of patients
3. Focus on quality and evidence-based medicine
4. Security and privacy
5. New healthcare professionals
6. Information technology and decision support systems
7. Globalization
8. Demographic changes (aging, diversity)
9. Prevention and disease management
10. Patient safety
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Will current organizational charts be viewed as simplistic and obsolete as new types of relationships form across organizational boundaries and as new orga- nizational forms develop? Will current models of supervision become archaic in the advent of new information technologies and innovations?
Information technology has changed the face of HR through the in- creasing impact of human resources information systems (HRIS). Since HR affects the entire workforce, the impact of HRIS can be dramatic in terms of lowering administrative costs, increasing productivity, speeding up response times, enhancing decision making, and improving customer service. These impacts are achieved by automating routine HR functions. The most frequent uses of HRIS include automating payroll processing, maintaining employee records, and administering benefits programs (Human Resource Department Management Report 2004).
One of the major HRIS trends today is self-service. This involves Inter- net-based systems that allow managers to access employee records for admin- istrative purposes and enable employees at all levels to change personal infor- mation or benefits. The self-service system then reduces paperwork and offers greater convenience to both managers and employees. Also, more and more managers are using software to recruit, screen, and pretest job applicants on- line before interviewing and hiring them. Software for training and promo- tion purposes are also being used (Snell, Stueber, and Lepak 2007).
Consumer Mind-Set of Patients
With the increased availability of medical and health information on the In- ternet come consumers who are more healthcare literate and savvy. This trend is leading to a healthcare environment that is driven by consumers. In the future, consumers will likely have possession of their own healthcare record and perhaps maintain their health information through a personal website. As consumers assume a larger share of their own healthcare costs, we may see customized health benefit plans designed to meet the person’s unique needs. Consequently, the healthcare workforce will need to be more attuned to consumer demands and concerns, and healthcare organizations have to improve the manner by which patients participate in their own med- ical decision making. See Chapter 17 for a discussion on consumer-driven healthcare.
Focus on Quality and Evidence-Based Medicine
Business pressures and the movement toward evidence-based medicine will force healthcare organizations to set quality and clinical outcomes goals, work toward achieving them, monitor them, and publicize the results. Organiza- tions will need clinicians and teams to work together on quality improvement initiatives, and those who are trained in quality improvement methodologies will be more in demand.
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Total quality management (TQM) is a set of principles and practices whose core ideas include understanding customer needs, doing things right the first time, and striving for continuous improvement. Criteria for the Malcolm Baldridge National Quality Award have provided the impetus for organizations to rethink their approach to managing their human resources. Each year, the Baldrige Award is given to an organization in each of these five areas: manu- facturing, service, small business, education, and healthcare (Quality 2004). However, TQM programs have not been a panacea for improving productiv- ity and responding to customer needs. In many cases, managers viewed qual- ity as a quick fix and became disillusioned when results did not come easily.
Recently, many organizations (both in and out of healthcare) have adopted Six Sigma, a more systematic approach to quality that requires major changes in philosophy and HR programs. Six Sigma is a statistical method of translating a customer’s needs into separate tasks and defining the best way to perform each task in concert with others. By examining the optimum process, Six Sigma can have a powerful effect on the quality of products, the enhance- ment of customer service, and the development of employees. Unlike other quality tools, Six Sigma allows process mistakes and medical errors to be caught before they happen (Pande, Newman, and Cavanagh 2000). This sys- tem has also helped HR departments to shift their focus from administrative activities to strategic planning (Gubman 2004).
Security and Privacy
Concerns over the security and privacy of medical records, heralded in large part by the Health Insurance Portability and Accountability Act (HIPAA) of 1996, will shift focus, as patient records become accessible and shareable through elec- tronic means (e.g., website, personal digital assistant, e-mail). Information tech- nology specialists who understand the technological, legal, and ethical impera- tives involved in healthcare information privacy will be highly sought after.
Maintenance and storage of personnel files are another issue in this area. Employee files contain critical personal information, including perform- ance appraisals, salary history, and disciplinary actions. Easy accessibility to medical and personnel records, identity theft, and other technology-driven se- curity breaches will plague healthcare managers and necessitate new policies and standards. Generally, HR managers and supervisors recognize the impor- tance of discretion in handling all types of employee information. Also, HIPAA and its Privacy Rule protect the use and disclosure of medical infor- mation, and the Electronic Communications Privacy Act (ECPA) of 1986 protects private electronic communications, although the ECPA offers limited protection for e-mail use (a discussion of which is beyond the scope of this chapter). One recent survey of 400 HR professionals found that 54 percent of respondents work for organizations that have written privacy policies that safeguard employee data (Bohlander and Snell 2007).
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Employer challenges to privacy rights in the workplace have sparked a heated debate over the extent to which fundamental rights previously thought untouchable may be lessened through the employment relationship. Employ- ers defend their intrusion into employee privacy by noting their legitimate in- terest in some of the personal affairs of employees, particularly those that may directly affect productivity, workplace safety, and motivation or morale (Chieh and Kleiner 2003). Examples are drug use, criminal activity, and coworker dating. Court decisions generally attempt to balance an employee’s legitimate expectation of privacy against the employer’s need to supervise and control the efficient operation of the organization.
New Healthcare Professionals
Advances in technology and changes in the way disease is treated and man- aged will bring about the possible reeducation and retraining of existing pro- fessionals and the birth of new healthcare professionals. New employees, as al- ways, will need to be trained and their competencies will need to be assessed, and managers will have to determine these professionals’ role and place within the organization. Existing professions will evolve in both predictable and un- foreseen ways.
Information Technology and Decision Support Systems
Information technology has increasingly touched all aspects of healthcare. The era of the manual, paper medical record is ending and moving toward the age of paperless systems. Use of decision support systems will be more prevalent, helping clinicians and teams to effectively use new diagnostic, surgical, clinical, and medical devices and new pharmaceuticals. Information technology literacy will be a core competency among healthcare personnel, enabling them to match the technological savvy of healthcare consumers.
Globalization
The emergence of illnesses and health-related concerns that took root in other countries (e.g., HIV/AIDS, SARS, foot-and-mouth disease, mad cow dis- ease) and the ongoing threat of biological and chemical terrorism signal the effects of globalization on healthcare. This trend will lead to the disintegra- tion of the fine line between traditional medicine and public health, requiring the healthcare workforce of all hospitals and healthcare systems to be trained in areas such as disaster management and community surveillance. Public health workers, physicians, and other caregivers will need to work together to respond to new strains of diseases and to develop new methods of treatment. These groups will require training in and acculturation to this collaborative imperative.
In the United States, some consumers are going abroad to receive health services. Known as medical tourism, this phenomenon is driven by the high costs
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of healthcare and the limited availability of certain products and services in the United States. To respond to this trend, some healthcare organizations in this country are partnering with foreign healthcare institutions through a process of mutual patient referrals. Expected to be widely adopted in the future, mutual patient referral initiatives will need to be staffed. The HR department will play a role not only in staffing but also in evaluating such initiatives.
Demographic Changes
The aging of the population is a predictable change that will affect society overall and healthcare in particular. The demographic projections are very clear: By 2011, the number of U.S. residents in the over-65 age bracket will be 40 million; by 2019, this number will grow to 50 million. The over-80 population will also see rapid growth: By 2020, the number of octogenarians will reach 7 million (U.S. Census Bureau 2004).
Such rapid increases in the number of senior citizens have profound im- plications on the types and volume of services demanded and on the compe- tencies required of healthcare professionals. Employers are concerned that older workers’ retirement will mean the loss of these employees’ expertise, a loss that will be difficult to replace. Consequently, employers are making a real effort to attract and retain older workers, particularly those who have taken early retirement, and many of these workers are responding positively to such initiatives. AARP reports that 68 percent of workers between the ages of 50 and 70 years plan to work in retirement, either full-time or part-time (Boh- lander and Snell 2007). The healthcare costs for older workers are higher than that for younger employees, but such costs are more than offset by the mini- mized need (and costs) for recruitment, turnover, training, and transitions (Hall 2005).
By 2050, the ratio of the nonwhite to white population in the United States will be 1 to 3 (see Chapter 6 for this changing racial profile). The growth in diversity will demand cultural competency and sensitivity from the healthcare workforce. Healthcare organizations may meet this demand through retraining their staff on diversity issues, recruiting members of under- represented or minority groups to be part of the caregiving staff and/or man- agement team, and incorporating cultural competence education into the staff orientation and training curriculum.
Prevention and Disease Management
The aging of the population will mean not only more demand for healthcare services but also more emphasis on geriatrics and its various subfields such as chronic disease management and home health care. The concept of disease prevention, although not new, continues to regain momentum as healthcare consumers take more charge of their bodies and learn alternatives to tradi-
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tional medicine. Healthcare organizations are heeding these cues, providing more preventive services and boosting their current disease management programs. New professions will likely emerge to meet this trend, and again the onus falls on healthcare organizations to provide training to current care- givers and to recruit employees who are skilled and knowledgeable in these concepts.
Patient Safety
As we learn more about medical errors and their causes, changes will likely be required in healthcare processes and information technology. Such changes affect HR practices in that staff will need to be trained in communi- cating outcomes (adverse or otherwise) to patients and their family, report- ing incidences of errors to management, managing conflicts that arise, and other tasks within the purview of the staff ’s responsibilities. Training in the use and application of medical technology and in the dissemination and shar- ing of patient health information using electronic means is an appropriate re- sponse to this trend.
Also, healthcare organizations have to create a culture in which staff are not penalized for reporting errors or ostracized for committing mistakes. Such a culture encourages improvement in staff performance and morale, which then leads to fewer medical errors and higher quality. Performance evaluation criteria should include a patient safety component as well.
SHRM’s Survey Results
In 2004, the Society for Human Resource Management (SHRM) conducted a survey of HR executives. That survey revealed ten trends in the workplace that respondents believed would affect the future of HRM. The order in which these developments are presented here corresponds to the level of im- portance given to them by the survey respondents (see Figure 18.2).
In 2006, SHRM updated this study to include six additional trends (Schramm 2006):
1. Increased demand for work–life balance 2. New attitudes toward aging and retirement as baby boomers reach
retirement age 3. Growth in the number of individuals and families without health
insurance 4. More incidents of identity theft 5. Work intensification as employers strive for higher productivity with
fewer employees 6. Vulnerability of existing technology to attack or disaster
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Rise in Healthcare Costs
The rise in healthcare costs has multiple effects not only on individual health- care organizations but also on the U.S. economy. First, it stifles economic growth: The more expensive healthcare services get, the less able people are to afford them and the less willing the government and third-party payers will be to reimburse. Second, it causes greater tension between employers and em- ployees, as organizations are forced to shift their healthcare costs to employ- ees, which results in higher insurance premiums and higher copays. Third, it fuels strike actions from employees who get frustrated with the employer’s at- tempts to cut down on organizational costs.
Focus on Domestic Safety and Security
The threat of terrorism is pushing employers to devote substantial resources to ensuring employee safety and security and to training employees on disaster
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FIGURE 18.2 Developments and Practices
Inside and Outside
Healthcare
2004 SHRM Study
1. Rise in healthcare costs
2. Focus on domestic safety and security
3. Use of technology to communicate with employees
4. Legal compliance
5. Use of technology to perform transactional HR functions
6. Global-market issues
7. Retirement and labor shortages
8. E-learning
9. Export of U.S. jobs to developing countries
10. Changing definition of family
2006 SHRM Update
1. Increased demand for work–life balance
2. New attitudes toward aging and retirement
3. Growth in the number of uninsured
4. Growth of identity theft
5. Work intensification
6. Vulnerability of technology to attack or disaster
SOURCE: SHRM (2004); Schramm (2006)
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management. Security policies are being revised and tightened, and multiple units of organizations, including HR, are involved in this process.
Use of Technology to Communicate with Employees
Developments in information and communication technology have changed the manner in which employers communicate with employees. This trend has brought out other issues, such as ensuring the privacy of the information be- ing communicated, the need for employees to learn to use the new commu- nication methods, and the concern over security of such communication tools.
Legal Compliance
Legal requirements, particularly state-level legislation, concerning employ- ment will continue to become increasingly complex and unpredictable. The globalization of the economy has resulted in the need for employers to be knowledgeable about the legal implications of recruiting and hiring employ- ees from other countries. The emergence of the European Union places par- ticular demands on human resources, as European countries’ employment re- quirements in such areas as privacy, pension, and discrimination differ from those observed in the United States.
Use of Technology to Perform Transactional HR Functions
HR departments face pressures to bring value to the organization and to pro- vide HR services in an efficient and effective manner. One approach to hitting this imperative is to use technology for a variety of functions, including train- ing, evaluating compensation and benefits, and managing performance.
Global-Market Issues
Global insecurity and conflict are affecting all aspects of the economy, partic- ularly businesses with an international presence. Organizations, especially healthcare systems, are establishing tight security measures to protect their in- terests. They are also coping with the economic downturn brought on by the war in Iraq and by homeland security initiatives. The oil market, which is deeply affected by the disturbance within oil-producing countries, is causing significant fluctuations in prices as well. These global issues directly and indi- rectly influence the supply of healthcare workers as well.
Retirement and Labor Shortages
The aging of the population is ushering the retirement of older healthcare professionals and is consequently contributing to labor shortages. Healthcare organizations situated in locales with a high proportion of older workers may need to assess new approaches to retirement, including phased retirement.
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E-Learning
Training and skills development will continue to be an important part of or- ganizational strategies. However, training programs will increasingly be re- quired to demonstrate their value, in terms of improving the performance of employees and showing a return on investment. Use of more efficient com- puter-based training modalities will continue to be popular.
Export of U.S. Jobs to Developing Countries
The debate continues over the appropriateness of offshoring jobs, especially white-collar jobs, which once seemed immune from globalization. Whether the practice of exporting jobs for the purpose of cutting costs will in any way abate is uncertain, although security concerns may place some limits on this practice.
Changing Definition of Family
Debates over same-sex marriage and providing benefits to domestic partners will likely continue, even as the number of companies that offer such benefits rises. An annual survey by Business & Legal Reports states that the percentage of companies that provide domestic-partner benefits to exempt and nonexempt workers increased from 13 percent in 2003 to 19 percent in 2005 (Human Rights Campaign Foundation 2008). Eleven percent of plant employers pro- vided such benefits (up from 8 percent in 2003), and 7,768 companies made this benefit available in 2005 (Human Rights Campaign Foundation 2008).
Six Overall Challenges in Human Resources Management
Recently, SHRM examined and categorized various HR literatures to identify current and emerging HRM challenges and issues (Schwind 2007). The top ten were talent management, cultural transformation, managing change, lead- ership development, HR technology, work–life programs, diversity, healthcare cost management, globalization, and ethical leadership.
Table 18.1 shows the connection between the HR trends and the HR management challenges identified by SHRM through its survey and study. Each trend identified in the 2006 survey update involves implications that must be addressed by both the HR department personnel and line managers (Schramm 2006; Schwind 2007). Three of these trends (see trends 1, 3, and 7 in Table 18.1) will specifically affect healthcare, not just the general U.S. workplace. All organizations inside and outside healthcare are forced to con- front the cost dilemma and the uninsured status of many residents in the United States. Whether these issues will be addressed in the 2008 presidential election and whether politically acceptable solutions will be implemented in subsequent years remain to be seen.
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HR Trends HRM Issues/Challenges
1. Rising healthcare costs • HR technology • Management of healthcare costs • Globalization • Ethical leadership
2. Increased outsourcing of jobs • Cultural transformation to other countries • Change management
• Diversity • Globalization • Ethical leadership
3. Threat of high healthcare costs to U.S. • HR technology economic competitiveness • Management of healthcare costs
• Globalization • Cultural transformation • Ethical leadership
4. Increased demand for work–life balance • Talent management • Cultural transformation • Change management • Work–life programs
5. Retirement of large numbers of baby • Talent management boomers • Change management
• Leadership development • Work–life programs
6. New attitudes toward aging and • Cultural transformation retirement • Change management
• Work–life programs
7. Rise in number of uninsured individuals • Change management and families • HR technology
• Management of healthcare costs • Ethical leadership
8. Increase in identity theft • HR technology • Ethical leadership
9. Work intensification through increased • Cultural transformation productivity • Change management
• Leadership development • Ethical leadership
10. Vulnerability of technology to attack • Change management or disaster • HR technology
• Ethical leadership
TABLE 18.1 The Connections Between HR Trends and HRM Challenges
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Table 18.2 shows the overall and specific HRM challenges of health- care organizations today. These factors extend beyond “people issues” and re- quire the development of a skilled and flexible workforce as well as a profes- sional HR function. Overriding the overall challenges is the need to measure the effectiveness of HRM in achieving human resources goals and objectives (again, what gets measured gets managed). Benchmarking of HR functions is crucial. It requires that the levels of performance be determined on a wide range of HR areas, including employee commitment, turnover and retention, productivity, cost containment, diversity, job satisfaction, and compliance with legal regulations. In addition, the organization may benchmark its own outcomes against those of its competitors in areas such as cost effectiveness, market share, customer satisfaction, clinical quality, technology, profitability, and reputation in the community. Obviously, the HR department can more directly influence employee outcomes than organizational outcomes, given that the latter are affected by various external and non-HR factors. Neverthe- less, determining where an organization stands on both employee and orga- nizational outcomes relative to its competitors is a necessary prerequisite to maximizing the impact of the HR function.
Human Resources and Strategic Management
Human resources represent the single most important cost in most health- care organizations. How effectively the organization uses and integrates its human resources with its strategy can have a dramatic effect on its ability to compete and survive in a hypercompetitive environment. The goal is to de- velop the organization’s human resources so that its skill, knowledge, and distinctive capability exceed those of its competitors. Obviously, the specifics depend on the nature of the organization and its market. By assessing exter- nal factors, the organization can exploit environmental opportunities and neutralize threats.
Human resources management should also be responsive to the mar- ket. HR functions should be focused on producing staff who are ready, will- ing, and able to respond to customer needs and wants in terms of quality, in- novation, variety, and service excellence. As seen in Table 18.2, such goals are not easy to achieve in light of environmental challenges such as rapid change, workforce diversity, and skill shortages. Shortages, in particular, represent a severe challenge because a typical healthcare organization does not educate and graduate healthcare professionals, so it is dependent on educational insti- tutions to produce appropriately trained graduates.
In addition, the integration of HR and strategy does not occur in a static internal environment. The organization faces continual pressure from external stakeholders to restructure, outsource, downsize, and modify its
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culture. While integration of HR and strategy can enhance organizational per- formance in the long run, many short-term pressures can impede this integra- tion in the real world.
Nevertheless, benefits of such integration include the following (Gomez-Mejia, Balkin, and Cardy 2004, 21–22):
• Encouragement of proactive rather than reactive behavior • Explicit communication of organizational goals to all stakeholders • Stimulation of cultural thinking and examination of assumptions • Identification of gaps between the current situation and the future vision • Participation of line managers • Identification of HR constraints and opportunities • Creation of a common bond
Using Technology
Advancements in information technology have enabled healthcare organiza- tions to take advantage of the information explosion. With myriad electronic and Internet-based networks, unlimited amounts of information can be stored, retrieved, and used in a variety of ways. Even in healthcare, which has a long tradition of “hands-on” service, the web is transforming the way orga- nizational goals are accomplished. Computer-mediated connections are giv- ing rise to a new generation of virtual workers, who work from home or wher- ever the work takes them.
The implications of information technology for managing human re- sources are enormous. Because it allows coordination of activities with indi- viduals and groups outside the organization, information technology can:
• lower administrative costs, increase productivity, speed response times, improve decision making, and enhance service;
• support efforts to link and leverage the organization’s human resources to achieve competitive advantage;
• enhance service and employee empowerment (through remote access to HR databases that can support HR decisions and increase the ability to connect with other parts of the organization); and
• expand the scope and function of the HR department because it enables the provision of training through e-learning or distance learning.
Technology has changed the speed with which HR communicates with employees. HR can draft a company memo and, within minutes, e-mail it to all employees. Also, many organizations have created intranet sites that pro- vide employees with a variety of information. Lastly, technology can assist in benchmarking the HR function against that of similar organizations. Such a comparison reveals which areas of the HR function are strong and weak and what HR experiences can be benchmarks.
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As beneficial as it is, technology also presents a number of concerns, in- cluding employee privacy and intellectual property rights. Confidentiality of employee data is a growing concern, and employer liability in the event of se- curity breaches is still unclear (SHRM 2004).
Enhancing Productivity
Obviously, the Internet can enhance employee and organizational productivity— defined as quantity and quality of output divided by input. Other factors also enhance productivity as noted in Table 18.2, including flexibility in job design to accommodate different family patterns; organizational restructuring, out- sourcing, and downsizing; optimal recruitment and retention policies; en- couragement of a high-productivity culture; design of a compensation system to enhance motivation; employee empowerment; and benchmarking HR or- ganizational processes and outcomes against those of other organizations. These and other factors have been discussed throughout this book.
The challenge is to find the appropriate mix of tactics that will enhance productivity without reducing organizational commitment, loyalty, and re- tention. Many healthcare organizations recognize that employees are more likely to choose an employer and to stay if they perceive the environment of- fers a high quality of work life. A perception that the workplace is great is pos- itively related to high job satisfaction, low absenteeism, and low turnover, and these traits in turn are related to good customer service. An exclusive fo- cus on quantitative/accounting measures of productivity to the exclusion of HR considerations can reduce an organization’s employee commitment, loy- alty, and retention.
New investments in technology have rapidly increased the productivity of American workers over the past decade. However, investments in faster computers and other technologies are beginning to level off. Thus, additional and continued productivity will have to be the result of developing knowledge and ability, improving work environments, and providing enhanced employee motivation. This makes the role of human resources management all the more crucial in the future (Miller 2005).
Containing Costs
Employees, managed care, and government insurance programs (i.e., Medicare and Medicaid) have all put pressures on healthcare organizations to lower costs and to improve efficiency. In response, organizations have tried a number of ap- proaches, including restructuring, downsizing, outsourcing, and employee leas- ing. Each method has had a direct impact on HR policies and practices.
Each approach presents significant potential downsides, particularly in terms of reducing employee attachment to the organization. In well-managed healthcare organizations, accounting considerations focused on short-term data should never have priority over longer-term HR considerations. Labor
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costs can be controlled through a compensation system that uses innovative reward structures to control labor costs and reward staff for behaviors that re- late to achieving strategic goals. In addition, costs may also be contained by some combination of the following HR tactics:
• Select better candidates, which will lead to the likelihood that they will stay and perform better.
• Train employees to make them more efficient and productive. • Structure work to reduce time and resources needed to deliver quality
services (i.e., decentralization). • Empower employees through reducing direct supervision and increasing
the span of control. • Reinforce cultural values that emphasize service and efficiency. • Create economic incentives for employees to enhance their health status
and economize their use of healthcare services.
Managing Diversity
Nearly 90 percent of the growth in the U.S. workforce from 1995 through 2005 involved women; immigrants; and people of African American, His- panic, or Asian heritage (U.S. Census Bureau 2005). In the past, the typical U.S. worker was a white male and a member of a single-earner household. Fewer than 20 percent of today’s employees fit that “typical” description. In March 2005, an estimated 10.9 percent (or 30 million) of the U.S. popula- tion was foreign born, and this percentage is rising as a result of high rates of international immigration (U.S. Census Bureau 2005).
A diverse workforce is becoming the norm in American businesses. Healthcare consumers and employees alike have become and will continue to become more diverse. Specific diversity challenges include the following (Gomez-Mejia, Balkin, and Cardy 2004, 120–53):
• Linking affirmative action programs to employee diversity so that the two systems support one another
• Identifying how each of the HR functions can contribute to the successful management of diversity
• Reducing potential conflicts among employees that cause cultural clashes and misunderstandings
• Developing a profile of employee groups who are less likely to be well represented in higher-level positions, and creating policies targeted to their needs
• Implementing HR systems that assist the organization in managing diversity
To accommodate the changing demographic trends, many healthcare organizations have increased their efforts to recruit and train a more diverse
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workforce through providing more internships to members of minority groups, flexible work-schedule options for women and older workers, phased- retirement options for older workers, diversity training programs, a culture of mutual respect, access to higher-level positions, and an environment that re- spects and is sensitive to different cultural beliefs.
Among the most important impediments to managing employee di- versity are prejudice, resistance to change, group cohesiveness, segmented communication networks, resentment of perceived favoritism to minorities, and competition for opportunities. Managing diversity requires awareness and sensitivity to all of these factors.
Complying with Legal Standards
Much of the growth of the HR function in the past four decades is attributa- ble to its crucial role in keeping the organization out of legal trouble. Most healthcare organizations are concerned about potential liability resulting from HR decisions that may violate laws or regulatory guidelines set by federal, state, and local governments and legislators. These laws and regulations are continually interpreted and reinterpreted in cases brought before government agencies, state and federal courts, and the U.S. Supreme Court.
We live in a highly litigious society, and this fact shows no sign of letting up. In fact, federal lawsuits that charge violation of human resources legislation have increased faster than any other area of civil litigation—up by 125 percent since 1991 (Bernardin 2007). In 2005, 24 percent of judgments against com- panies were for $1 million or more, compared with only 7 percent in 1994.
A healthcare organization’s HRM depends significantly on its ability to deal with government legislation and regulation. This requires keeping track of the external legal environment and developing internal systems to ensure compliance and to minimize legal challenges. Establishing formal policies and internal administrative channels to address sensitive legal issues (e.g., sexual harassment) can help to reduce claims.
Healthcare managers need to understand legal issues that affect how they manage their staff because many of their decisions are constrained to some extent by laws. They should be particularly sensitive to legal issues when making decisions about whom to hire or promote, how to compensate, what benefits to offer or not offer, how to accommodate dependents, and how and when to terminate.
Legal compliance in HR practices has become more complex as a result of new employment laws, regulatory guidelines, and court decisions that interpret existing laws. Examples of newer employment laws are the Americans with Dis- abilities Act and the Family and Medical Leave Act. Court decisions relate to is- sues such as worker safety and sexual harassment. All of these changes have made HR decisions more difficult and risky and have increased the cost of making poor decisions. HR managers can advise and consult with departmental managers
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about the legal aspects of personnel decisions. Obviously, legal compliance is not the only priority in employment decisions but should be heavily considered along with other work-related factors such as timeliness, service quality, and productiv- ity. Well-managed healthcare organizations go well beyond legal compliance in managing their human resources; they attempt to consistently practice the golden rule—do unto others as you would have them do unto you.
Summary
This chapter examines the present and future trends in the business and healthcare industries to determine the effects they will have on healthcare HRM. Six overall challenges are also identified, with the overriding challenge being how to best integrate strategic management and human resources man- agement so that the HR function becomes a full partner in the pursuit of the organization’s objectives.
Strategic human resources management requires that each HR func- tion be aligned both horizontally and vertically. Horizontal alignment occurs when each HR function reinforces and supports other HR functions. For ex- ample, it would make no sense to recruit the best people and then fail to of- fer them opportunities for growth and advancement. Vertical alignment, on the other hand, occurs when each HR function reinforces and supports one or more strategic goals or objectives. For example, it would make no sense to have a strategic goal of providing the highest-quality service and then com- pensate staff below the market or provide little or no training. The result of that would be mediocre staff, high turnover, and dissatisfied patients.
Continually monitoring and evaluating the organization’s programs are critical. This can be done using a variety of HR indicators, such as absenteeism, turnover, employee attitude survey data, time to fill positions, and customer sat- isfaction data. Benchmarking such indicators against those of other organiza- tions that provide similar services provides an external validation of organiza- tional strengths and weaknesses. Such data should then be used to implement a cycle of continuous improvement.
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Discussion Questions
1. Which of the specific environmental and organizational HR challenges identified in this chapter will be most important in healthcare in the next 20 years? Use your own experience in your answer.
2. Most HR executives in healthcare do not have a major responsibility for achieving top management priorities such as improving productivity, quality of care, cost containment, customer
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For the past 20 years, Metropolitan Hospital
celebrated the fact that 50 percent of its new hires in management positions had been women. The hospital assumed that with such a practice, women would eventually repre- sent 50 percent of their top management ex- ecutives (vice presidential level and above). But something unexpected happened. Five years ago, the hospital became concerned that its diversity program was not producing results. Instead of seeing an increase in the number of women in executive positions, the organization was observing a decline. Tal- ented female managers were leaving, drain- ing the pool of capable people.
To address this problem, the hospital founded the Task Force on Retention and Ad- vancement of Women in Executive Positions. This task force aimed to pinpoint the reasons that female executives were leaving. The task force conducted a massive information- gathering initiative, interviewing women in all position levels and women who left. The team uncovered three main areas of concern through the interviews: (1) limited opportu- nity for advancement, (2) lack of mentoring and networking, and (3) existing work and family issues.
In response to these findings, Metro- politan Hospital retooled the workplace, re-
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service, and financial performance. What do you think are some of the reasons for this gap? Outline several ways that an HR department can align its practices with the strategic goals of the organization.
newing its commitment to flexible work arrangements, reduced workloads, and flex time. The hospital also developed plans for company-sponsored networking and formal career planning for its women employees. Since these initiatives were implemented, the results have been positive. Retention of women employees at all levels has risen, and turnover rates of those in management posi- tions (just below the executive level) have been lower for women than for men. In ad- dition, the hospital promoted the highest percentage (41 percent) of women as new executives in its history.
Metropolitan Hospital is now basking in its new reputation as a woman-friendly employer. This gives the organization exter- nal recognition in the marketplace, which helps with recruiting efforts, and enhances their reputation in the community.
Case Questions 1. How and why did the problems at
Metropolitan Hospital occur in the first place?
2. How did the changes address the underlying problems?
3. What managerial actions are required to successfully implement a diversity program?
Case
3. What are the pros and cons of a more diverse workforce? Are more diverse healthcare organizations better able to compete because of their diversity? Why?
Experiential Exercise
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