September 17, 2007

Hire Right
By Sandra Nunn, MA, RHIA, CHP
For The Record
Vol. 19 No. 19 P. 14

Among the most integrated and wired healthcare organizations, Presbyterian Healthcare Services has its fingers on the pulse of the U.S. business environment. In the land of narrow financial margins, healthcare ranks near the top due to the skyrocketing costs of technology and the need for highly skilled workers. As a result of this economic burden, Presbyterian started a formal initiative in August 2003 to reduce employee turnover.

As a nonprofit organization, Presbyterian realized that any savings developed through reduced employee turnover could be ploughed back into the organization to improve patient care through more-educated staff and the acquisition of information systems technology, including those leading to a computerized healthcare record.

The savings from any reduction in employee turnover are significant, particularly in an organization with nearly 10,000 employees. There are numerous costs associated with employee turnover, including lost productivity, hiring temporary staff, repeated training, time to reschedule and reallocate resources, advertising, and human resources processing new staff. In the article “The Cost of Employee Turnover,” William G. Bliss says, “These calculations can easily reach 150% of the employee’s annual compensation figure. The cost will be significantly higher (200% to 250% of annual compensation) for managerial and sales positions.”1 In an organization with 10,000 employees, a turnover rate of even 5% would be staggeringly expensive. Bliss estimates that a midsized company of 1,000 employees with a 10% annual rate of turnover costs itself $7.5 million.2

Educated in business management and certified in human resources, Victor Jensen serves as Presbyterian’s regional recruiter, crisscrossing the country in search of healthcare talent to feed a constantly growing enterprise. Jensen explains that human resources management recognized two forces behind turnover: Managers were not formally trained to hire, and there was no standard procedure for them to follow in the hiring process.

In April 2004, the organization began a search for a company (or companies) that could bring a standardized methodology and a software program that would support hiring the best people the first time. After an exhaustive search, the 12-member committee comprised of clinical and nonclinical staff decided Targeted Selection, a product from Development Dimensions International, Inc. (DDI), would meld well with other human resource development tools already in place. The tool was easy to understand and used terminology familiar to employees because other DDI products were already part of the training repertoire.

Targeted Selection became part of a “Hire Right” bundle that included tools from other vendors to help in the preinterview process, support peer interviewing, and aid in job shadowing. For example, the preinterview tool helps determine if an applicant demonstrates compassion, initiative, and energy—attributes important in healthcare positions.

After Presbyterian created a suite of tools for managers to employ in hiring, the next step was getting everyone to learn and use the tools. “Behavior on the job is the most telling indicator of retention and usually is the reason for termination from the job,” Jensen says. “Teaching behavior is difficult and is a focus away from the traditional emphasis of hiring for technical skills.”

During a 2004 management retreat, the concept of hiring right was introduced as a new expectation. Using concepts from Jim Collins’ Good to Great, the idea of the “bus” was introduced. In his book, Collins writes, “Yes, compensation and incentives are important but for very different reasons in good-to-great companies. The purpose of a compensation system should not be to get the right behaviors from the wrong people but to get the right people on the bus in the first place and to keep them there.”3

In the years since, 675 managers in the Presbyterian system have received formal hire right training, particularly in behavioral interviewing. Jensen was sent to DDI’s Targeted Selection training and has, in turn, helped two additional facilitators through training. The behavioral hiring module was originally designed to last 16 hours, but managers felt they could not be away from work for two full days. A compromise was reached in which the module was successfully redesigned to last a full day and would become part of the management team’s expected learning portfolio.

“The commitment to require all managers to take the course was easy for leadership when they learned that hiring properly could result in a 45% fall in turnover,” Jensen notes.

Bliss spells out the consequences of not hiring properly, including managers who have “to understand what work remains and how to cover that work until a replacement is found” when a position turns over, the time for managers who have to calculate the cost of training new staff, the impact on departmental productivity, the cost of lost knowledge and skills and, occasionally, the cost of lost customers when the employee takes loyal customers with him or her.4 If the lost employee is part of a project team, delays could also occur.

Now that most managers have received training, hiring right has become mandatory at Presbyterian. The correct documentation must be collected for every interview and every hire every time, and that documentation must be routed to human resources before an offer can be made to any applicant. Even a Behavioral Interviewing Question Library for hire-right managers has been purchased to help develop appropriate and standardized queries. The idea is that small reductions in turnover will more than pay for these efforts and tools.

The accompanying chart features samples of how applicant responses might be scored using the hire right method.

— Sandra Nunn, MA, RHIA, CHP, is a contributing editor at For The Record and the enterprise records manager at Presbyterian Healthcare Services in Albuquerque, N.M.

References

1. Bliss WG. Cost of employee turnover. The Advisor. Available here.
2. Bliss WG. Cost of employee turnover. The Advisor. Available here.
3. Collins J. Good to Great: Why Some Companies Make the Leap ... and Others Don’t. New York: Harper Collins, 2001.
4. Bliss WG. Cost of employee turnover. The Advisor. Available here.