Communication Breakdown At City Hospital

City Hospital was losing money, and the hospital’s executive director knew action had to be taken
to reduce expenditure. Since a major portion of the costs were labour-related, the choice was
clear–reduce staff. A natural target for staff reduction was the fifth floor. This unit generally
served “observation” patients but had been less than half-full for some time. Fifth-floor patients
could be easily reassigned to other units, and closing that floor would save a significant amount
of money. Approximately forty employees worked on the fifth floor, all of them reporting to Lily
Joe, the nurse manager. Hospital management decided that since her floor was being closed
entirely, Lily’s services would no longer be needed. There were, however, some complicating
factors.

First, the hospital had a policy of “reassignment” rather than “layoff” and thus had a commitment
to place the fifth-floor staff in other open positions for which they were qualified within the
hospital. While it was unclear how many of the 40 displaced staff could be moved to other areas,
management knew that many could be accommodated. Second, most of the employees on the
fifth floor were long term staff who had become somewhat “set in their ways”, compared to the
employees in other departments.

Indeed, the fifth floor had developed a reputation for being an uncooperative group that
consistently resisted even the most minor changes, and most managers felt that the quality of
care provided by the fifth-floor nurses was marginal at best. Similarly, Lily was generally regarded
as the least effective of the hospital’s nursing managers. As a result of all of these factors,
managers in other units were extremely reluctant to accept displaced fifth-floor workers.

A series of management meetings took place to plan the closing of the fifth floor. The meetings
were conducted by the assistant head of nursing and attended by the hospital’s nurse managers,
as well as the director of personnel, director of public relations, and a communications/labour
relations consultant. Initially, management had considered keeping Lily out of these meetings,
but later decided that it would “look better” if she were included in the planning process. During
every meeting, Lily cried openly, much to the discomfort of the others present.

Everyone who participated in the meetings was sworn to secrecy; no one was to mention the
closing of the fifth floor until the plan was completely developed and announced. Nevertheless,
rumours quickly began to circulate that something was “in the works” and that the fifth floor
specifically had been targeted by the management. Eventually, a plan was developed. On the
following Wednesday morning, the deputy head of nursing and the director in charge of
personnel would meet with the fifth-floor staff to tell them the news and provide them with
details either about their move to other units (for those for whom other positions had been
found) or (for those who would be laid off) about the strikingly generous severance package the
hospital was providing.

Immediately afterward, this same information would be announced at a general meeting of all
management; simultaneously, the hospital’s chief medical officer (CMO) would conduct a
meeting of the medical staff. Individual letters, signed by the director general, would be
couriered to all employees on Monday (so that most would reach by Wednesday), and
departmental meetings for employees would be conducted on Wednesday afternoon to discuss
the situation in detail with all the staff. Finally, the news media would be contacted late
Wednesday afternoon and provided with statements, which would appear on Thursday.

On Monday, two days before the layoffs were to occur, the group met with the CMO of the
hospital, Dr Manoj Mehta, and the chief administrative officer (CAO), General Khurana, to review
their plan. Much to their dismay, Dr Mehta and General Khurana both reacted extremely
negatively to the plan. Both wanted to know exactly how many people would be laid off. The
group was unable to produce exact numbers, since the number of vacant positions fluctuated
almost daily due to resignations and new hires. “Nursing never gets its numbers right!” Dr Mehta
roared in frustration. In addition, General Khurana strenuously objected to having the letter to
employees come from the director general. ‘’We’ve got to stop passing the buck and shoving the
blame upward’’, he argued.

Both demanded specific numbers and significant changes in the announcement letter by the
group before they would allow the plan to move forward. At the same time, however, the
organization’s grapevine was functioning at full throttle. The fifth floor was going to be closed,
probably this week, the rumour mill held. Indeed, the fifth-floor employees themselves had
apparently gotten wind of the plan. On the hospital’s computer system, one fifth-floor employee
typed an announcement that was communicated throughout the hospital—“We’re long-service,
formerly loyal employees who are about to be kicked out onto the street by the hospital. If you
would like to help, we are starting a fund to help support those who will be hurt by this. Please
send your contribution to (name, address of fifth-floor employee).”

On Wednesday, fifth-floor employees came to work dressed in black and wearing black
armbands. They covered the curtains in patient rooms with black sheets, much to the dismay and
confusion of the patients in those rooms. When no one came to tell them their floor was being
closed, they became all the more upset. On Thursday, tension mounted. While senior
management continued to debate the numbers involved in the layoff and the appropriateness of
the communication plan, the fifth-floor employees waited for someone to tell them to go home.
Eventually, the situation became unbearable. One nurse began to cry, and soon all were sobbing
and hugging each other. The personnel director was called, and when she went to the fifth floor
and saw what was happening, she told all of the employees to just go home. With the help of the
deputy head of nursing, she oversaw the hurried transfer of fifth-floor patients to other floors.
On Friday, the hospital announced that the fifth floor had been closed.

Questions

1. Analyse the reasons for the spreading of rumours regarding the layoffs of the observation
ward staff.
2. Was it correct to include Lily Joe in the initial discussion meeting?
3. Ideally, how should this situation have been handled?