emcee Evaluati ng th, Activities: ¢ Financi educi, tancial Impact of Human Resource Management ing the Cost of Turnover R |. OBlecrives M mu. W. 4. To provide you with Practice in lata a wing conclusions Managerial rope analyzing data and drawing conclusions regarding To mak © you awa : its impae on AY Of the potential costs of controllable, dysfunctional turnover and Pact on net income or profit. C To m ake you activitne eo Meee of the potential benefits of homan resource management ies to an organization’s “bottom line. OUT-OF-CLASS PREPARATION Time: 2 hours IN-CLass TIME Succesteo: 45 minutes Proceoures. Te the entire exercise, including the “Background” on the Charlotte Health System and three exhibits. Using the data in the exhibits, do the calculations (on your own, prior to class) requested on Form 1.3. Then, assemble groups of three to five students during the class period and discuss each of the questions. At the end of the class period, have a spokesperson for each group discuss the group’s answers and rationale with the entire class. BACKGROUND ‘The healthcare industry has undergone dramatic change and restructuring during the decade ofthe 1990s and early 2000s. Mergers, consolidations, and downsizing have become the norm as organizations struggled to provide more cost-effective, high-quality services demanded. by managed-ca been the development of * of hospitals, re organizations and corporate employers. A major response to these pressures has integrated delivery systems,” which typically combine multiple units physician practices, outpatient facilities, long-term care facilities, and insurance ‘The goal of these systems is to provide “seamless” care through internal rlerrals, a conmmon electronic medical record, common policies and procedures, etc. However, the reality has been somewhat less than a total success. Among the problems identified have been differences in values and incentive es between the organizational units, lack of top management knowledge of some of the units acquired, and inability to “integrate” the cilfferent units clinically and managertally The Chi ‘arlotte (North Carolina) Health System was developed trom a base of a public hospital to which various delivery sites were added ater Harry Majors became CHO 15 years ago. Since his arrival, Majors and his executive team have created the dominant health sy m in North Carolina. Despite this success, the system continues to be under pressure from employers nd managed-care organizations to further reduce its casts and document both linical quality and cost-eflectiveness Almost four years aj to “professio! or aligned with e3 procedures Hum Resources Managem xercse 6 + bv an Resources. Williams came ( igo, Majors and the board of directors decided that the time had come nalize” the human resource function since the organizations they had purchased xhibited varying degrees of sophistication and vastly different policies and Betty Williams was recruited from another health system as the new VP for (0 her job after completion of an MA degree in Human. ent from the University of Alabama and 16 years of experience in the pth aa mp: f oan Reserve Management Atte Rening the as of Taree a116 Human Resource Managment Depart Budget for Yours ne drug Fo Department Budget per Year a 110.000 eee $288,000 & Equipment and Supplies 24000 a py agen 62,000 73,000 $175,000 $334,000. oS Tota field, During the three she has been at Charlotte Health System, she has hired tres HRM stafipersons in eerutment, employee benefits, end compensaticn H.R. Cost JUSTIFICATION ‘As the Board has considered how to reduce the cost of service delivery in hh m, te office in general, and the Human Resources Department in particular, have con oneones scrutiny. Williams has been told she needed to justify the additional by, i, allocation to her department over the past three years. Exhibit 1.6 shows her departoiny budge for year one (the year priar to her arrival) as well asthe three years since her arr. board has calculated the “extra” costs of the Human Resources Department over the pst years (using year one as the base) to be $680,000, The largest percentage cost increases ‘sgalaries and benefits” and in “equipment and supplies.” Most of the latter increases wer hc ‘result of upgrades in computer hardware and software. The Board has scheduled a meeting for next Monday. One of the agenda itenis 1 « ‘examine the costs of the Human Resource Management Department with the possibility, «i budget cut for next year. Williams has been asked to make a presentation to justify her bu. and how expansion of her department has contributed to the system's “bottom line.” Sh liv considered a number of changes she made which she believes have improved overall » ‘Among these were the development of system career ladders to ‘employee retention, in-house management training programs to improve management 01 ppetence, development of “model” staffing ratios to reduce employee stress and burn! quarterly performance reviews to increase employee feedback, absenteeism incentive pr grams, and initiation of an annual employee survey to identify problem areas. ‘After some discussion with her staff, Williams decided that it would be easier | “document” the benefits of increased employee retention. Exhibit 1.7 shows the employe: Ewer _1.7_Annwal Turnover Rate by Category for Years One throught Kour Hy Porcent Turnover per Year One Two Three Fou Executive (n= 127)" 128 us 9.2 8 ‘Physician (n = 367) 18.1 76 wo 15 Other Professional (n = 615) 26 21 183 Nonprofessional (n = 804) 29.0 25.3 a1 a Totals” (0 = 19.3) 23.8 22.3 23 128 “rs the average number of eles” each ealegoy oer to four yor poo! This the weighted average turrover rate forall four categories fer eac the four yrs. Part 1 + Hanan Resource Manager in PepectiveLdivilaaal Quer the 1 ‘Tumover Costs an fora Categories’ —— Executive Physician ‘pation Coss (191 nea wear nH in Wo Et Iteriews Ant aw Costs so73 nw ow me separ aton Pay wear wn Hii ae on) yom.00 namin oisa1 ano 2M wr nt) Job Advertncwents Pre-Eeploynent Adina aes nansca —24tpeat ET wo Beare ai ation waa an TH wo 6 10 gessmert Testing vane abo paw 400 van ih Stat Tee Ho een a0 von 0 a zon are 21200 126.0 iter ies 87 0 wn wm wt a 21 Bramnatons 175.00 Urs00 7500 V0 v5.00 siorso—agracp— 1475028709 ys. ‘Training Costs Jeformationa Literature e000 eo ae wat eo Foual Trawnn ars 300.00 516% m0 00 onshe Job Wane oats 2700 omy 29568 som 89680 win 20 Reduced Productivity ating Learning Period ausas7 40907 OME SAN 1216) Tota! grotwss _suigizn0 _ $14danso _S.43800 508 wogried overage _Willlann's arrival as well a fr each OF He turnover by category for year one (Ihe Ye Following three years since her arial These vrata shaw a decline an turnover for al 10 personal categories over the four ye! It Williams and her staff hi ry and thee caations are ST Tixhibit 18, Most af these © the “reduced pronuctivity «ant af turnover per cinplayee by personnel cate cations ‘ean be documented during the learning, Pe productivity for «small sab san of he das Felt alo ty prouctivly of those whe replaced thea ding their ft ee months. they then taleaated the dolar cast of ths Feat productivity for a one year petal their assumption #5 that the wey produciatycamtnes at the same level for a Ja-month period and then dsanpell More realistically, the Hower producti probably However, they feel the declines overtime but cantinaes ft Fonger than a 1-rnonth peri Frome personnel recor. Thee except) or these caeafatons, the stall «ale dated the average snontlly pared AL to the average hun 6» eager ee ne Manav dees Ring eC Tm a