HUMAN
RESOURCES IN
HEALTHCARE
Managing for Success
FOURTH EDITION
Bruce J. Fried and
Myron D. Fottler, Editors
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H
R
H
M
HUMAN
RESOURCES IN
HEALTHCARE
Managing for Success
FOURTH EDITION
Bruce J. Fried and
Myron D. Fottler, Editors
Health Administration Press, Chicago, Illinois
Association of University Programs in Health Administration, Arlington, Virginia
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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.—Fourth edition.
       p. ; cm.
  Includes bibliographical references and index.
  ISBN 978-1-56793-708-4 (alk. paper)
  I. Fried, Bruce, 1952– , editor. II. Fottler, Myron D., editor. III. Association of University
Programs in Health Administration, publisher.
  [DNLM: 1.  Personnel Management—methods.  WX 159]
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BRIEF CONTENTS
Preface………………………………………………………………………………………….xv
Acknowledgments…………………………………………………………………………xxiii
Chapter 1. Strategic Human Resources Management………………………1
Myron D. Fottler
Chapter 2. Employment Law, Employee Relations, and Healthcare…35
Drake Maynard
Chapter 3. Healthcare Professionals……………………………………………79
Kenneth R. White and Dolores G. Clement
Chapter 4. Credentialing of Healthcare Providers……………………….107
John C. Hyde II
Chapter 5. Workforce Diversity………………………………………………..123
Rupert M. Evans Sr.
Chapter 6. Job Analysis and Job Design……………………………………143
Myron D. Fottler
Chapter 7. Recruitment, Selection, and Retention………………………181
Bruce J. Fried and Michael Gates
Chapter 8. Performance Management……………………………………….235
Bruce J. Fried
Chapter 9. Compensation Practices, Planning, and Challenges………275
Bruce J. Fried and Howard L. Smith
Chapter 10. Employee Benefits………………………………………………….321
Dolores G. Clement, Maria A. Curran, and Sharon L. Jahn
Chapter 11. Organizational Development and Learning………………..351
Donna L. Kaye and Myron D. Fottler
v
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vi
B rief Co n te n ts
Chapter 12. Managing with Organized Labor……………………………..389
Donna Malvey and Amanda Raffenaud
Chapter 13. Workforce Planning in a Rapidly Changing
Healthcare System………………………………………………….427
Erin P. Fraher and Marisa Morrison
Chapter 14. The Nurse Workforce in Healthcare Organizations………455
Cheryl B. Jones, George H. Pink, and Lindsay T. Munn
Chapter 15. Human Resources Management Practices for
Quality and Patient Safety……………………………………….503
Jordan Albritton and Bruce J. Fried
Appendix A: Human Resources Metrics…………………………………………..529
Myron D. Fottler and Bruce J. Fried
Appendix B: Cases……………………………………………………………………….537
Bruce J. Fried
Case 1: Implementing Comparable-Worth Legislation….539
Case 2: Physician Engagement…………………………………542
Case 3: Nurse Staffing Ratios and the State Nursing
Association……………………………………………………….545
Case 4: Is the Nurse Shortage Over for Good? …………..546
Case 5: A Living Wage……………………………………………549
Case 6: Same-Sex Marriage and Human Resources
Policy………………………………………………………………551
Index…………………………………………………………………………………………555
About the Editors………………………………………………………………………….557
About the Contributors………………………………………………………………….559
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DETAILED CONTENTS
Preface………………………………………………………………………………………….xv
Acknowledgments…………………………………………………………………………xxiii
Chapter 1. Strategic Human Resources Management………………………1
Myron D. Fottler
Learning Objectives…………………………………………………..1
Introduction…………………………………………………………….1
Environmental Trends………………………………………………..6
The SHRM Model…………………………………………………….9
Organizational Mission and Corporate Strategy…………….14
Human Resources and The Joint Commission……………..23
A Strategic Perspective on Human Resources……………….25
Who Performs HR Tasks?…………………………………………26
Summary……………………………………………………………….27
Discussion Questions……………………………………………….28
Experiential Exercises……………………………………………….29
References………………………………………………………………30
Chapter 2. Employment Law, Employee Relations, and Healthcare…35
Drake Maynard
Learning Objectives…………………………………………………35
Introduction…………………………………………………………..36
History of Employment Law in the United States ………..38
Employment Law in the Twenty-First Century…………….48
How Employment Law and Employee Relations
Can Promote Strategic Human Resources
Management………………………………………………………56
Other Employment Law and Employee Relations
Issues………………………………………………………………..68
Summary……………………………………………………………….70
Discussion Questions……………………………………………….72
vii
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viii
Det a iled C o n te n ts
Experiential Exercises……………………………………………….72
Notes…………………………………………………………………….75
References………………………………………………………………76
Web Resources………………………………………………………..77
Chapter 3. Healthcare Professionals……………………………………………79
Kenneth R. White and Dolores G. Clement
Learning Objectives…………………………………………………79
Introduction…………………………………………………………..79
Professionalization…………………………………………………..80
Healthcare Professionals……………………………………………82
Considerations for Human Resources Management……….95
Changing Nature of the Health Professions…………………98
Summary……………………………………………………………..103
Discussion Questions……………………………………………..103
Experiential Exercise………………………………………………104
References…………………………………………………………….104
Chapter 4. Credentialing of Healthcare Providers……………………….107
John C. Hyde II
Learning Objectives……………………………………………….107
Introduction…………………………………………………………107
Historical Background…………………………………………….109
Elements of the Credentialing/Privileging Process………112
Concerns and Issues of Credentialing and Privileging…..115
Typical Credentialing/Privileging Encounter……………..118
Future Trends in Credentialing and Privileging…………..119
Summary……………………………………………………………..119
Discussion Questions……………………………………………..120
Experiential Exercise………………………………………………120
References…………………………………………………………….121
Chapter 5. Workforce Diversity………………………………………………..123
Rupert M. Evans Sr.
Learning Objectives……………………………………………….123
Introduction…………………………………………………………123
Definition of Diversity and Inclusion…………………………124
Prejudice in the Workplace………………………………………126
The Business Case for Diversity………………………………..127
Diversity in Healthcare Leadership:
Two Major Studies…………………………………………….131
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D etailed C ontents
Diversity Management……………………………………………134
The Impact of Diversity on Care Delivery………………….134
Components of an Effective Diversity Program…………..136
Summary……………………………………………………………..138
Discussion Questions……………………………………………..139
Experiential Exercise………………………………………………140
References…………………………………………………………….140
Chapter 6. Job Analysis and Job Design……………………………………143
Myron D. Fottler
Learning Objectives……………………………………………….143
Introduction…………………………………………………………143
Definitions……………………………………………………………144
The Job Analysis Process…………………………………………145
Job Design……………………………………………………………160
Specialization in Healthcare…………………………………….160
Summary……………………………………………………………..171
Discussion Questions……………………………………………..172
Experiential Exercises……………………………………………..173
References…………………………………………………………….173
Supplement…………………………………………………………..179
Chapter 7. Recruitment, Selection, and Retention………………………181
Bruce J. Fried and Michael Gates
Learning Objectives……………………………………………….181
Introduction…………………………………………………………181
Recruitment………………………………………………………….183
Selection………………………………………………………………201
Turnover and Retention………………………………………….217
Summary……………………………………………………………..223
Discussion Questions……………………………………………..224
Experiential Exercises……………………………………………..224
References…………………………………………………………….228
Chapter 8. Performance Management……………………………………….235
Bruce J. Fried
Learning Objectives……………………………………………….235
Introduction…………………………………………………………235
The Role of Performance Management……………………..241
Establishing Job Standards and Appraisal Criteria………..243
Collecting Job Performance Data……………………………..244
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ix
x
Det a iled C o n te n ts
The Cynicism About Performance Management………….254
Conducting Effective Performance
Management Interviews……………………………………..257
The Special Case of Bullies and Toxic Managers………….260
Summary……………………………………………………………..265
Discussion Questions……………………………………………..265
Experiential Exercises……………………………………………..266
References…………………………………………………………….272
Chapter 9. Compensation Practices, Planning, and Challenges………275
Bruce J. Fried and Howard L. Smith
Learning Objectives……………………………………………….275
Introduction…………………………………………………………275
The Strategic Role of Compensation Policy………………..277
Compensation Decisions and Dilemmas…………………….280
Determining the Monetary Value of Jobs…………………..287
Special Considerations for Compensating Physicians…….303
Summary……………………………………………………………..314
Discussion Questions……………………………………………..314
Experiential Exercises……………………………………………..315
References…………………………………………………………….316
Chapter 10. Employee Benefits………………………………………………….321
Dolores G. Clement, Maria A. Curran, and Sharon L. Jahn
Learning Objectives……………………………………………….321
Introduction…………………………………………………………321
Brief Historical Background…………………………………….323
Major Federal Legislation………………………………………..324
Overview of Employment Benefits……………………………327
Designing a Benefits Plan………………………………………..343
Managerial Implications………………………………………….346
Summary……………………………………………………………..346
Discussion Questions……………………………………………..348
Experiential Exercises……………………………………………..348
References…………………………………………………………….349
Chapter 11. Organizational Development and Learning………………..351
Donna L. Kaye and Myron D. Fottler
Learning Objectives……………………………………………….351
Introduction…………………………………………………………352
Organizational Development: Objectives
and Services………………………………………………………353
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D etailed C ontents
Competencies Needed…………………………………………….354
Employee Engagement…………………………………………..354
Performance Improvement Consultation……………………357
Change Management……………………………………………..360
Succession Planning……………………………………………….360
Learning Goals………………………………………………………365
Designing Training for Sustainability…………………………367
Instructional Methods…………………………………………….373
Employee Onboarding……………………………………………375
Trends in Organizational Development
and Learning…………………………………………………….377
Summary……………………………………………………………..380
Discussion Questions……………………………………………..381
Experiential Exercises……………………………………………..381
References…………………………………………………………….383
Web Resources………………………………………………………387
Chapter 12. Managing with Organized Labor……………………………..389
Donna Malvey and Amanda Raffenaud
Learning Objectives……………………………………………….389
Introduction…………………………………………………………389
Overview of Unionization……………………………………….391
The Labor Relations Process……………………………………392
A Review of Legislative and Judicial Rulings………………402
Developments in Organizing Healthcare Workers………..408
Interview with a Nurse Activist………………………………..413
Management Guidelines………………………………………….416
Summary……………………………………………………………..418
Discussion Questions……………………………………………..419
Experiential Exercises……………………………………………..419
References…………………………………………………………….421
Web Resources………………………………………………………426
Chapter 13. Workforce Planning in a Rapidly Changing
Healthcare System………………………………………………….427
Erin P. Fraher and Marisa Morrison
Learning Objectives……………………………………………….427
The Link Between Macro-Level Policy and MicroLevel Healthcare Workforce Outcomes………………….427
The Importance of Healthcare Workforce Planning
in a Rapidly Changing System……………………………..429
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xii
Det a iled C o n te n ts
The Strengths and Weakness of Workforce Models ……..430
Estimating the Supply of Healthcare Workers……………..432
Estimating the Demand for Healthcare Services………….436
Matching Supply to Demand…………………………………..442
Real-World Applications …………………………………………444
Summary……………………………………………………………..446
Discussion Questions……………………………………………..446
Experiential Exercise………………………………………………447
Notes ………………………………………………………………….449
References…………………………………………………………….450
Chapter 14. The Nurse Workforce in Healthcare Organizations………455
Cheryl B. Jones, George H. Pink, and Lindsay T. Munn
Learning Objectives……………………………………………….455
Introduction…………………………………………………………455
Types of Nursing Personnel…………………………………….456
Definitions and Measurement…………………………………..457
Determining Nurse Staffing Requirements…………………464
Key Issues in Managing Nurse Staffing and
Workload………………………………………………………….466
Looking to the Future……………………………………………481
Summary……………………………………………………………..487
Discussion Questions……………………………………………..487
Experiential Exercises……………………………………………..487
Notes ………………………………………………………………….490
References…………………………………………………………….490
Supplement…………………………………………………………..498
Chapter 15. Human Resources Management Practices for
Quality and Patient Safety……………………………………….503
Jordan Albritton and Bruce J. Fried
Learning Objectives……………………………………………….503
Introduction…………………………………………………………503
Quality and Process Improvement…………………………….508
Common Quality Improvement Strategies…………………509
Common Themes and Tools……………………………………512
The Importance of Human Resources……………………….513
Human Resource Practices and Team Effectiveness……..514
Summary……………………………………………………………..523
Discussion Questions……………………………………………..523
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D etailed C ontents
Experiential Exercise………………………………………………524
References…………………………………………………………….526
Appendix A: Human Resources Metrics…………………………………………..529
Myron D. Fottler and Bruce J. Fried
References…………………………………………………………….534
Appendix B: Cases……………………………………………………………………….537
Bruce J. Fried
Case 1: Implementing Comparable-Worth Legislation….539
Case 2: Physician Engagement…………………………………542
Case 3: Nurse Staffing Ratios and the State Nursing
Association……………………………………………………….545
Case 4: Is the Nurse Shortage Over for Good? …………..546
Case 5: A Living Wage……………………………………………549
Case 6: Same-Sex Marriage and Human Resources
Policy………………………………………………………………551
Index…………………………………………………………………………………………555
About the Editors………………………………………………………………………….557
About the Contributors………………………………………………………………….559
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PREFACE
This book is the fourth edition of Human Resources in Healthcare: Managing for Success. The first edition was published in 2001, an infamous year
that brought issues of globalization to the forefront in the United States.
Economic vulnerability had been present for some time, notably in the loss
of dominance of the United States as a manufacturing economy dating to
the 1970s. For Americans born after World War II, we experienced—many
for the first time—a vulnerability that extended beyond economics, politics,
and changes in social structure. We learned in a brutal manner that our sense
of personal safety was illusional and that globalization was more than an
abstract concept. The lessons of the Vietnam War, notably that US military
dominance had disintegrated, were reinforced by two arguably inconclusive
wars. US vulnerability extended from personal safety concerns to cybersecurity threats and the global emergence and reemergence of diseases. From
within, we saw the disintegration of confidence in our economic structures,
culminating in the 2008 economic collapse spurred by a deregulated banking
sector.
Technologically, the changes have been monumental, leading to
extraordinary progress in communication, medicine, and countless other
areas of life but also posing very significant threats. Socially, the demographics
of the US population came to encompass increasing diversity in both numbers and types, viewed by many as a validation of the American dream and
by others as a threat to the American identity. Election of the first AfricanAmerican president was seen by many as a victory for hope, upward mobility,
and profound cultural change, but by many others as a threat to the social
order. With few exceptions, the political environment in Washington, DC,
was characterized by unprecedented polarization and outright hatred.
Healthcare, of course, has not stood still since 2001. It has undergone
tremendous changes, many of which were affected by larger economic, political, technological, and social factors. Economic constraints and the unconstrained increase in the cost of healthcare fed into demands for “bending the
cost curve,” leading to changes in incentive structures in the US healthcare
system and its payment mechanisms. Politically, even in the midst of congressional gridlock, passage of the Affordable Care Act in 2010 represented the
most important federal legislation since the enactment of Medicare in 1965.
xv
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Prefa c e
As of this writing, the law continues to be under attack, and the eventual state
of the law is uncertain.
Whatever the eventual outcome, more people are likely to have access
to healthcare services, placing additional pressures on the healthcare system
for effectiveness and efficiency. Socially, the aging of the baby boomers
has, as predicted, placed increasing pressures on the healthcare system. The
increasing diversity of the population has reinforced the need for cultural
competence and systems of care that are responsive to social and cultural differences. In the workforce, generational diversity has created the need to consider reward and motivational structures that are generationally appropriate.
Healthcare systems continue to be under pressure to meet three aims:
quality, cost containment, and access to care. Attention to quality has become
increasingly acute as incentive structures focus on rewarding quality and in
effect have begun to place sanctions on organizations, in some cases arguably,
for substandard care. Quality improvement processes are a mainstay of organizations, requiring the active engagement and participation of employees.
Enter healthcare human resources management (HRM). Despite the
changes of the past 15 years, people continue to play a critical and central
role in providing health services. While automation and other technological
advances have allowed other industries to downsize, technological changes
in the healthcare industry generate the need for trained and well-managed
health professionals. While other industries have outsourced an incalculable
number of jobs, healthcare services cannot be significantly outsourced, with
the exception of medical tourism, which operates on the margins of US
healthcare.
Moreover, the healthcare workforce is under increasing pressure.
Incentive structures have led to increased severity among hospitalized
patients, and cost containment pressures have led in some instances to
decreases in staffing with the remaining workers facing an increased workload. Managers are being asked to manage and retain a workforce that is in
many cases highly stressed and mobile. Millennials, in contrast to earlier generations, tend to have a high need for personal development but only limited
attachment to the organization. Further, jobs are changing as the healthcare
system creates demands for new competencies. Effective job design, training,
and performance management mechanisms need to be well developed and
executed effectively.
We could go on documenting changes in the healthcare system, but
instead we will describe the current edition of Human Resources in Healthcare and how each chapter in this edition addresses key realities and changes
in healthcare. Undoubtedly, we will have overlooked some changes, and
future changes are difficult to predict with confidence. Therefore, we offer
this volume under the assumption that readers consider the content of this
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Prefac e
book in the spirit of continuous lifetime learning. Change is a given, but
recognizing change and adapting effectively do not necessarily follow. In the
words of Albert Einstein: “As far as the laws of mathematics refer to reality,
they are not certain; and as far as they are certain, they do not refer to reality.” We could say the same about healthcare and healthcare management.
Effective HRM is a product of at least three elements: cognitive
knowledge, affective competencies, and experience. This book addresses
domains of cognitive knowledge, including the idea of organizational strategy and HRM; the larger environment within which HRM occurs, including
the legal environment and health workforce labor markets; and the multiple
processes and systems involved in managing the healthcare workforce. For
this knowledge (and, for that matter, any management knowledge) to be
applied effectively, managers need to possess a variety of affective characteristics including competencies in such areas as emotional intelligence, interviewing, conflict management, and problem solving. Mastery of HRM, like
virtually every other aspect of life, requires experience, practice, and learning
from successes and failures through self-insight, reflection, and mentoring.
The topics in this book are a starting point for developing mastery in working
effectively with people in healthcare organizations.
In Chapter 1, Myron D. Fottler establishes the framework for this
book: strategic HRM. An overall theme is that HRM is a responsibility of all
people in the organization and certainly is not limited to the formal human
resources (HR) department. The basic premise of strategic HRM is that HR
practices and processes need to support the mission and strategies of the
organization. This situation is far from a given. We have found repeatedly
in the classroom that when we query a group of experienced managers, we
are far more likely to find examples of poor HR practices than effective ones.
Similarly, HR departments, which should be a key part of the senior management team, are very often viewed as operating in opposition to the interests
of employees and the organization as a whole.
All organizations operate within a legal environment, and in Chapter
2, Drake Maynard provides foundational knowledge in the multitude of laws,
regulations, and court decisions affecting HRM. Like other aspects of the
law, the legal framework for HRM is in a constant state of flux with changing
legislation at multiple levels, new interpretations resulting from court decisions, and changing regulations. Among the many areas of law covered are
the Americans with Disabilities Act as amended, Title VII of the Civil Rights
Act, the Fair Labor Standards Act, and the Family and Medical Leave Act.
The chapter discusses the legal issues surrounding sexual harassment, the
forms of sexual harassment, and how managers can avoid as well as respond
to charges of sexual harassment. Written by a legal expert in employment
law and containing many references to landmark legal cases, the chapter is
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xvii
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Prefa c e
nevertheless remarkably accessible to the nonlawyer. While most managers
need not have a thorough knowledge of all aspects of employment law, they
need to know the boundaries of the law and realize when their practices may
be testing the boundaries of legality. This chapter effectively provides this
foundation.
Healthcare organizations likely employ a broader range of professionals than do any other type of organization. The role of health professionals
continues to evolve as a result of changes in technology, health services, and
competency requirements. In Chapter 3, Kenneth R. White and Dolores G.
Clement provide essential information on the distinction between professions and occupations, the process of becoming a professional, licensure and
regulation, scope of practice, and the changing role of professionals. They
also provide background information on factors associated with supply and
demand for health professionals, including changes in technology, changes
in payment mechanisms, and the increasing diversity of the settings in which
healthcare services are provided.
John C. Hyde II authors a new chapter in this book on the credentialing of healthcare providers. Physicians have a complex relationship with
many healthcare organizations yet play a central role in determining the quality of health services. In Chapter 4, Hyde discusses the legal framework and
key court cases related to credentialing and privileging. He details the Joint
Commission requirements to ensure high-quality and safe patient care and
describes the processes that organizations should follow in ensuring a competent workforce. Hyde acknowledges the uncertainties and risks in credentialing and the difficulties faced, for example, when a surgeon requests privileges
for a new procedure despite having limited experience with the procedure.
The issue of diversity is perhaps the most misunderstood aspect of
management, yet its importance is integral to employee satisfaction and
effectiveness as well as the quality of patient care. In Chapter 5, Rupert M.
Evans Sr. stresses the importance of understanding the impact of diversity
among patients and healthcare workers. He provides an expansive definition
of diversity, characterizing diversity as falling into the three categories of
human diversity, cultural diversity, and systems diversity. Using this framework, he makes the important distinction between diversity and the idea of
inclusion. Taking a positive approach, he cites the business case for diversity
and the potential for effectively managing diversity to positively affect patient
outcomes and reduce disparities.
An employee’s actual job is a central part of HRM. As described by
Myron D. Fottler in Chapter 6, jobs continue to change in their competency
requirements, how they are designed, and how they interact with other jobs
in an organization. Jobs also are the foundation for other HR practices. For
example, without a clear understanding of job requirements, establishing
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Prefac e
selection criteria for new employees is not possible. Nor is it possible to effectively coach individuals on their performance.
In Chapter 7, Bruce J. Fried and Michael Gates address the interrelated topics of recruitment, selection, and retention. In a rapidly changing
healthcare system, finding and selecting the right people for the job is critical.
However, selecting the best people for the job does not mean that prospective employees will choose to work for the organization, and it certainly does
not ensure that they will stay with the organization. Fried and Gates describe
alternative modes of employee recruitment as well as effective techniques for
distinguishing between job applicants with similar skill sets and backgrounds.
They address the controversial area of organizational fit and analyze its role
in the selection process. Employee retention is of paramount importance in
healthcare, and the authors provide evidence to support the importance of
retention and evidence-based practices that organizations can use to maximize the likelihood of retaining the right people.
Part of keeping people in the organization is working with them to
continually improve their performance. In Chapter 8, Bruce Fried addresses
the topics of measuring employee performance and using this information
to help employees develop their skills. This process, known as performance
management, also includes ensuring a work environment where people are
respected and valued. In this edition of the book, we have added a section
on an unfortunate but highly prevalent aspect of organizational life: the bully.
We describe the phenomenon of bullying, how to prevent it from occurring,
and how to respond once it comes to light.
Reward systems are central to employee motivation, satisfaction,
and performance. Noting that people work for both intrinsic and extrinsic
rewards, Chapter 9 focuses on extrinsic rewards, namely compensation. In
this chapter, Bruce J. Fried and Howard L. Smith address the role of compensation within the overall reward structure of the organization. They address
the key topic of how jobs are valued in monetary terms and how objective
job evaluation processes often need to be tempered by labor market considerations. In light of the current emphasis on individual and organizationwide pay for performance, they describe the strengths and drawbacks of different forms of incentive compensation, as well as considerations and trends
in physician compensation.
Financial compensation is but one part of the total compensation
that an employee receives. Employee benefits play a critical role in employees’ decision to join an organization, their satisfaction, and their likelihood
of staying with the organization. Dolores G. Clement, Maria A. Curran,
and Sharon L. Jahn devote a chapter to the highly significant role played
by employee benefits, in terms of both the cost to the organization and
the motivational potential of these benefits. They provide a road map of
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Prefa c e
employee benefits ranging from mandatory benefits, such as Social Security
contributions and workers’ compensation, to an array of voluntary benefits
including health insurance, life insurance, and leave. Of particular importance
is the attention to benefits plan design and how different employees value
various benefits. Among the benefits design issues addressed are the inclusion
of domestic partners in benefits, budget concerns, and related information
about self-insurance and stop-loss insurance.
Performance improvement is a critical function in all organizations
and is particularly important in healthcare, where technologies and methods
of providing care are in a state of continuous change. In Chapter 11, Donna
L. Kaye and Myron D. Fottler address performance improvement from
both organizational and individual perspectives. They note that performance
improvement initiatives are typically based on enhancing individual skills and
expanding an employee’s skill set. Training activities typically focus on the
individual employee’s current job and on remediating particular skill-set deficits. While these activities are important, when conducted alone they ignore
the impact of organizational factors on individual performance. By contrast,
organizational development is centered on enhancing both current and
future jobs, improving the work group or organization over the long term,
and attending to future work demands. Organizational development interventions are broad and include such activities as organizational diagnosis,
succession planning, and communication. Kaye and Fottler describe a broad
array of key organizational development processes and provide guidance on
implementation.
Among the many sectors of the economy, healthcare organizations
and public-sector organizations hold the greatest potential for increased
unionization. Laws and rules governing unionization in healthcare are somewhat different from those in other sectors. In Chapter 12, Donna Malvey and
Amanda Raffenaud summarize the legislative framework and judicial rulings
governing healthcare unionization, describe the evolving role of unions in
healthcare, and provide a description of the unionization and labor relations
process in healthcare organizations. They describe all phases of the labor relations process, from the union recognition phase through contract administration. The specific requirements and obligations of management and unions
in healthcare organizations, based largely on the 1974 amendments to the
National Labor Relations Act, are described. The chapter also addresses the
controversial area of physician unionization and the potential impact of the
Affordable Care Act on unions. Given the likelihood of increased unionization in healthcare, the authors provide guidance on working effectively in a
unionized environment.
Among the most difficult tasks in the healthcare system is projecting
health workforce needs and matching these needs with supply. While most of
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Prefac e
the chapters in this book approach workforce issues from an organizational
perspective, Erin P. Fraher and Marisa Morrison address workforce planning
from a broader macro policy perspective. They discuss and assess methods used
to ensure that the United States, or, for that matter, any country or jurisdiction, has the needed workforce in place, now and into the future. They examine
workforce planning not in a vacuum, but cognizant of changes throughout the
healthcare system that may affect workforce needs as well as new skill requirements. They address multiple related topics, including the distinction between
“demand” and “need,” the nature of oversupply and shortages, and alternative
methods of assessing projected supply of and demand for health workers, as
well as the lasting problem of uncertainty in making accurate projections.
The nursing profession is critical to the functioning of the healthcare
system. In the hospital sector, nurses are the only professional group present
24 hours a day and every day of the year. Nurses are highly skilled, indispensable, and central to patient care and quality. In Chapter 14, Cheryl B. Jones,
George H. Pink, and Lindsay T. Munn begin with a description of the types
of nursing personnel, their education, competency requirements, and scope
of practice. Understanding nursing roles is essential to understanding the
critical factors involved in nurse staffing and deployment. They then discuss
the substance of nurses’ work, staffing and alternative methods of measuring nursing workload, and issues such as the role of nurses in unionized and
nonunionized settings, nurse–physician relationships, and stress and burnout.
They also address the key influence nurses have in value-based purchasing,
being heavily involved, for example, in care coordination and in ensuring a
patient- and caregiver-centered experience.
The quality improvement movement has finally achieved its migration
from manufacturing and service industries to healthcare. Given incentive
schemes that link reimbursement to quality indicators, and the availability of
information on quality to payers and consumers, quality and patient safety
are clearly hallmarks of healthcare organizations. Quality improvement is
based on a synthesis of process analysis, measurement, and human creativity.
In Chapter 15, Jordan Albritton and Bruce J. Fried provide a review of the
quality improvement approach and summarize its forms (e.g., Lean). They
take the view that a great deal of attention has been given to the mechanics
of quality improvement, namely, the use of such quality improvement tools
as run charts and Pareto diagrams. However, the human element, which is
necessary to interpret data and devise creative and effective solutions to quality problems, has received less attention. In this chapter, Albritton and Fried
identify the HR requirements, such as the development of effective quality
improvement teams, that are essential to effectively apply quality improvement tools, interpret data, and develop effective and sustainable quality
improvement changes.
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Prefa c e
The two appendixes are new to this book. Appendix A discusses HR
metrics. Evaluation has become increasingly important in all aspects of organizational life, including HR functions. Appendix A provides background
information on the need for and use of HR metrics, and offers examples of
HR metrics. Appendix B includes six problem-based learning (PBL) cases.
PBL is a student-centered learning methodology requiring the student, along
with team members, to research a complex problem and design an evidencebased and feasible solution to the issue. As described in Appendix B, student
teams read the case problem and identify what they need to learn in order to
respond to the problem. These learning objectives form the basis for independent research and eventual collaboration of team members in writing the
case response. The PBL method has a motivational element in that students
themselves define their learning needs. Substantively, this approach provides
the opportunity for students to delve into specific HR issues in greater depth
and to use the most current research and writing on the topics presented in
the cases.
This textbook and the accompanying instructor resources are designed
to facilitate discussion and learning. The instructor resources include PowerPoint slides for each chapter and key teaching points. For access information,
e-mail [email protected].
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ACKNOWLEDGMENTS
We are first and foremost very grateful to our colleagues who participated
in writing this book. They are all very busy and successful people who generously gave of their time and expertise to write creative and interesting
chapters, and were enormously responsive to our comments and suggestions.
Thank you so much to all contributing authors.
Next, our colleagues at Health Administration Press provided extraordinary guidance from the overall book concept to the finest editing details. In
fact, as one chapter author indicated in an e-mail to a Health Administration
Press editor, “I wish you could edit all my manuscripts!” So we offer special
thanks to Andrew Baumann, Janet Davis, Cepheus Edmondson, Karin Horler, and Tulie O’Connor.
Bruce J. Fried and Myron D. Fottler
Thanks to my wife, Nancy, for her limitless emotional and intellectual support, and for, to the extent humanly possible, keeping me grounded in reality. For continuously keeping me motivated, challenged, and inspired, credit
most certainly goes to Aaron, Shoshana, Noah, Kit, and Scout. I am also
thankful for the opportunity over the past 23 years to have taught and learned
from the enormously talented students at the University of North Carolina
at Chapel Hill.
Bruce J. Fried
Thanks to Alicia Beardsley-Pigon, my student assistant and health services
administration graduate student at the University of Central Florida. Her
assistance and patience with typing versions of my chapters, facilitating communications with editorial colleagues and other authors, and finding appropriate and relevant materials to update the 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 Reid Oetjen, chair
of the Department of Health Management and Informatics at the University
of Central Florida, for his support of this project.
Myron D. Fottler
xxiii
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CHAPTER
STRATEGIC HUMAN RESOURCES
MANAGEMENT
1
Myron D. Fottler
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 labor intensive.
One reason for healthcare’s reliance on an extensive workforce is that producing a service and then storing it for later consumption is not possible.
In healthcare, the production of the service that is purchased and
the consumption of that service occur simultaneously. Thus, the interaction
between healthcare consumers and healthcare providers is an integral part of
the delivery of health services. Given the dependence on healthcare professionals to deliver services, the possibility of heterogeneity of service quality
must be recognized within an employee (as skills and competencies change
over time) and among employees (as different individuals or representatives
of various professions provide a service).
Human resources are all of the people who currently contribute to the
work of the organization as well as those who might contribute in the future
and those who have contributed in the recent past. The term human resources
also refers to the management of these people’s contributions and in this
sense is often abbreviated HR.
The intensive use of labor for service delivery and the possibility of
variability in professional practice require that leaders in the industry direct
1
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Hu m a n Re so u rc e s i n H e a l th c a re
their attention toward managing the performance of the people 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 and selection, training and development, appraisal, compensation, and
employee relations) but also the environmental and other organizational
aspects that impinge on human resources’ activities.
Strategic human resources management (SHRM) is the process of
formulating HR strategies and implementation tactics that are aligned and
reinforce the organization’s business strategy. It requires development of a
comprehensive set of managerial activities and tasks related to developing
and maintaining a qualified workforce. This workforce, in turn, contributes
to organizational 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 within the last decade is for HR
managers to adopt a strategic perspective in their job and to recognize critical
linkages between organizational strategy and HR strategies.
This book explains and illustrates the methods and practices for increasing the probability that competent personnel will be available to provide the services delivered by the organization and the probability that these employees will
appropriately 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, job performance must be evaluated,
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 performed within the context of
the overall activities of the organization. These functions are influenced or
constrained by the environment, the organizational mission and strategies
that are being pursued, and the systems indigenous to the organization.
Why study SHRM? How does this topic relate to the career interests
or aspirations of present or future healthcare executives? Staffing the organization, designing jobs, building teams, developing employee skills, identifying
approaches to improve performance and customer service, and rewarding
employee success are as relevant to line managers as they are to HR managers. A successful healthcare executive needs to understand human behavior,
work with employees effectively, and be knowledgeable about the numerous
systems and practices available to put together a skilled and motivated workforce. The executive also has to be aware of economic, technological, social,
and legal issues that facilitate or constrain efforts to attain strategic objectives.
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C h a p ter 1: Strategic H um an Resourc es Managem ent
Healthcare executives do not want to hire the wrong person, experience high turnover, manage unmotivated employees, be taken to court for
discrimination actions, be cited for unsafe practices, have poorly trained staff
undermine patient satisfaction, or engage in unfair labor practices. Despite
their best efforts, executives often fail at HRM because they hire 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 competitors by effectively managing their human resources. This competitive
advantage may include cost leadership (i.e., being a low-cost provider) and
product differentiation (i.e., having high levels of service quality). A 1994
study examined the HR practices and productivity levels of 968 organizations
across 35 industries (Huselid 1994). The effectiveness of each organization’s
HR 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 organizations 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 HR practices (Huselid,
Jackson, and Schuler 1997).
Several more recent studies have also shown that effective management
of human resources can increase profitability, annual sales per employee, productivity, market value, and growth and earnings per share (Kaufman 2010;
Messersmith and Guthrie 2010). In these studies, surveys were used to study
the sophistication of the organization’s HR practices, and responses created a
score from 0 to 100, where high scores represented state-of-the-art practices.
Performance was measured using accounting financial data. Results indicated
that organizations with better HR practices experienced greater increases in
financial performance relative to others. In addition, a survey of 200 chief
financial officers (CFOs) revealed that 92 percent believed that effective management of employees improves customer satisfaction (Mayer, Ehrhart, and
Schneider 2009). Customers also report more satisfaction when the climate
of the organization is more positive, employees generally get along well, and
turnover is low (Nishii, Lepak, and Schneider 2008).
Exhibit 1.1 summarizes HR practices that appear to enhance the effectiveness and outcomes of organizations. These practices are often present in
organizations that are effective in managing their human resources, and they
recur repeatedly in studies of high-performing organizations. In addition,
these practices are interrelated and mutually reinforcing; achieving a positive result by implementing just one practice on its own is difficult. Recent
research in healthcare suggests that innovative and sophisticated HR practices
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Hu m a n Re so u rc e s i n H e a l th c a re
are becoming more prevalent and enhance an organization’s overall performance (Platonova and Hernandez 2013).
While these HR practices generally have a positive impact on organizational performance, their relative effectiveness may vary depending on their
alignment (or lack thereof) among themselves and with the organization’s
EXHIBIT 1.1
Effective HR
Practices for
Healthcare
Organizations
Category
Practices
HR planning/job analysis
• Encourage employee involvement so that
HR practices and managerial initiatives have
strong buy-in.
• Encourage teamwork to make employees
more willing to collaborate.
• Use self-managed teams and decentralization as basic elements of organizational
design to minimize management layers.
• Develop strategies to enhance employee
work/life balance.
Staffing
• Be proactive in identifying and attracting
talent.
• In selecting new employees, use additional
criteria beyond basic skills (i.e., attitudes,
customer focus, and cultural fit).
• Provide opportunities for employee growth
so that employees are stretched to enhance
their skills.
Training/organizational
development
• Invest in training and organizational programs to enhance employee skills related to
organizational goals.
• Provide employees with future career opportunities by giving promotional priority to
internal candidates.
• Include customer service in new employee
onboarding and skill development.
Performance management
and compensation
• Recognize employees by providing monetary
and nonmonetary rewards.
• Offer high compensation contingent on organizational performance to reduce employee
turnover and increase attraction to highquality employees.
• Reduce status distinction and barriers such
as dress, language, office arrangement,
parking, and wage differentials.
• Base individual and team compensation on
goal-oriented results.
(continued)
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C h a p ter 1: Strategic H um an Resourc es Managem ent
Employee rights
• Communicate effectively with employees
to keep them informed of major issues and
initiatives.
• Share financial, salary, and performance
information to develop a high-trust
organization.
• Provide employment security for employees
who perform well so that they are not downsized because of economic downturns or
strategic errors by senior management.
Sources: Chuang and Liao (2010); Gomez-Mejia and Balkin (2011); Pfeffer (1995, 1998);
Wright et al. (2005).
mission, values, culture, strategies, goals, and objectives (Ford et al. 2006).
These HR practices may vary in their impact on healthcare organizations
depending on how well each one is aligned with and reinforces the others as
well as how well it is aligned with the overall business strategy.
No HR practices, even those identified in Exhibit 1.1, are “good” in
and of themselves. Rather, their impact is always dependent on how well the
process fits with the factors noted previously. Fit, or alignment, leads to better performance, while its lack creates inconsistencies (Ulrich, Younger, and
Brockband 2008). In general, organizational performance is enhanced when
HR practices are aligned with business strategy, are attuned to the external
environment, enable the organization to capitalize on its distinctive capabilities, and reinforce one another. Even though proving a causal relationship
between HR practices and organizational performance is extremely difficult,
it is reasonable for healthcare organizations to consider implementation of
the practices associated with high-performing organizations.
The bad news is that achieving competitive advantage through HRM
inevitably takes time to accomplish (Pfeffer 1998). The good news is that,
once achieved, this type of competitive advantage is likely to be enduring
and difficult for competitors to duplicate. Measurement is crucial in implementing these HR practices. Failure to evaluate the impact of HR practices
dooms these practices to second-class status, neglect, and potential breakdown. Feedback from measurement is essential for further development of
HR practices as a whole as well as for monitoring how well each practice is
achieving its intended outcomes.
Wolf (2012) notes seven characteristics of high-performing healthcare
organizations:
1. Visionary leadership
2. Consistent and effective communication
3. Selecting for fit and ongoing development of staff
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EXHIBIT 1.1
Effective HR
Practices for
Healthcare
Organizations
(continued from
previous page)
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Hu m a n Re so u rc e s i n H e a l th c a re
4.
5.
6.
7.
Agile and open culture
Central focus on service
Constant recognition and broad community outreach
Solid physician/clinical relationships
It is the combination of these characteristics that helps healthcare organizations drive exceptional outcomes in patient experience, engagement, quality,
and financial outcomes.
Most of these HR practices are described in more detail throughout
the book. Although the evidence presented in the literature shows that effective HR practices can strongly enhance an organization’s competitive advantage, it fails to indicate why these practices have such an influence. In this
chapter, we describe a model—the SHRM model—that attempts to explain
this phenomenon. First, however, a discussion of environmental trends is in
order.
Environmental Trends
Major environmental trends affecting healthcare institutions include changing private and government reimbursement (i.e., the Affordable Care Act),
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 diversity of the workforce,
shortage of capital, increasing market penetration by managed care, heightened pressures to contain costs, and greater expectations of patients. These
trends have resulted in increased competition, the need for higher levels of
performance, and concern for institutional survival. Many healthcare organizations are closing facilities; undergoing corporate reorganization; instituting
staffing freezes and/or reductions in workforce; 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.
The Society for Human Resource Management (2014) regularly
surveys expert panels to review recent and future trends in HRM. Broader
trends identified include the following:
• The continuing impact of the US economy has created challenges that
have affected budgets, hiring, and capital HR strategies.
• The need for skilled and educated workers is creating competition for
those in highest demand, which influences all areas of HR.
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C h a p ter 1: Strategic H um an Resourc es Managem ent
• Ongoing developments in information and communication
technologies (i.e., social media) have influenced recruiting and
selection.
• Demographic changes have increased the percentage of aging
employees and have increased diversity, affecting all aspects of HR
practice.
• These demographic changes have caused employers to emphasize
flexible and effective work/life strategies.
• Metrics and more in-depth data analysis are being required to
demonstrate the return on investment of HR expenditures.
• The increase in uncertainty and market volatility have made uncertainty
the new normal.
• Implementation of the Affordable Care Act, as well as the need to
ensure compliance with a wide variety of federal and state laws, has
created continuing challenges for HR managers.
Most of the growth in the capital HR function over the past few decades has
been attributed to its crucial role in keeping organizations in compliance with
HR laws and regulations produced by federal, state, and local governments
(Equal Employment Opportunity Commission 2014).
Gomez-Mejia, Balkin, and Cardy (2012) identified the eight most
significant HR environmental challenges as rapid change, the rise of the
Internet, workforce diversity, globalization, legislation, evolving work and
family roles, skill shortages, and the rise of the service sector. In addition, the
Society for Human Resource Management (2012) has projected that three
major challenges in HR over the next ten years will be retaining and rewarding the best employees, developing the next generation of corporate leaders,
and creating an organizational culture that attracts the best employees. To
survive and prosper, healthcare organizations need to continuously and rapidly adapt to change. HR is almost always at the heart of an effective response
system (Ulrich, Younger, and Brockband 2008).
Organizations are pursuing major competitive strategies to respond to
the turbulent healthcare environment, including offering low-cost healthcare
services, providing superior patient service through high-quality technical
capability and customer service, specializing in key clinical areas (e.g., becoming centers of excellence), and diversifying within or outside healthcare. In
addition, organizations are entering into strategic alliances and restructuring
themselves to “do more with less” (i.e., to provide high clinical and service
quality while containing costs). Regardless of which specific strategies are
pursued (e.g., inpatient hospital services), healthcare organizations are experiencing a decrease in staffing levels in many traditional service areas and an
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Hu m a n Re so u rc e s i n H e a l th c a re
increase in staffing in new ventures, medical informatics, specialized clinical
areas, and related support services.
The HR strategies that experts believe will be most effective in managing employees in the next ten years include the following (Society for Human
Resource Management 2012):
• Providing flexible worker arrangements
• Creating an organizational culture where trust, open communication,
and fairness are emphasized and demonstrated
• Providing employees with opportunities for career advancement
• Offering a higher total rewards package than other organizations that
compete for the same talent
Staffing profiles in healthcare are characterized by a limited number of highly
skilled and well-compensated professionals. Healthcare organizations are no
longer employers of last resort for the unskilled. At the same time, however,
most organizations are experiencing shortages of nursing and allied health
personnel.
The development of appropriate responses to the ever-changing
healthcare environment has received so much attention that the concept of
HRM planning is now well accepted in healthcare organizations. However,
implementation of such plans has often been problematic. Often the process
ends with the development of goals and objectives and does not include strategies or methods 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 the failure of
healthcare executives to assess and manage the external, interface, and internal stakeholders whose cooperation and support are necessary to successfully
implement any business strategy (i.e., corporate, business, or functional).
Successful strategy implementation requires healthcare executives to identify,
diagnose, and manage key stakeholders (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. Interface stakeholders
operate in both the internal and external environments; these stakeholders
may include members of the medical staff who have admitting privileges or
who are board members at several institutions. Internal stakeholders operate
within the organization, such as managers, professionals, and nonprofessional
employees.
Involving supportive stakeholders, such as employees and HR managers, is crucial to the success of any HRM plan. If HR executives are not
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C h a p ter 1: Strategic H um an Resourc es Managem ent
actively involved, then the employee planning, recruitment, selection, development, appraisal, and compensation necessary for successful plan implementation are not likely to occur.
The SHRM Model
A strategic approach to HRM 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
Exhibit 1.2 provides some examples of possible linkages between strategic
decisions and HR practices.
SHRM has not been given as high a priority in healthcare as it has
received in many other industries. This neglect is particularly surprising in
a labor-intensive industry that requires the right people in the right jobs at
the right times and that often undergoes shortages in some occupations. In
addition, the literature in the field offers evidence that organizations that use
more progressive HR approaches achieve significantly better financial results
than comparable, although less progressive, organizations do (see Exhibit
1.1) (Huselid 1994; Huselid, Jackson, and Schuler 1997).
Exhibit 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 relations. These trends are discussed in more detail in later chapters of this book.
The bottom line of Exhibit 1.3 is that organizations are moving to higher
levels of flexibility, collaboration, decentralization, and team orientation. This
transformation is driven by the environmental changes and the organizational
responses to those changes discussed earlier. However, few healthcare organizations facilitate these advanced options.
The benefits of SHRM to both the organization and its stakeholders
have been identified as management of positive rather than negative behavior,
explicit communication of organization goals, stimulation of critical thinking
and continual examination of assumptions, identification of gaps between the
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Hu m a n Re so u rc e s i n H e a l th c a re
EXHIBIT 1.2
Implications
of Strategic
Decisions on HR
Practices
Strategic Decision
Implications on HR Practices
Pursue low-cost competitive
strategy
Provide lower compensation
Negotiate give-backs in labor
relations
Provide training to
improve efficiency
Pursue service quality
differentiation competitive
strategy
Provide high compensation
Recruit top-quality candidates
Evaluate performance on the
basis of patient satisfaction
Provide training in guest
relations
Pursue growth through
acquisition
Adjust compensation
Select candidates from
acquired organization
Outplace redundant
workers
Provide training to new
employees
Pursue growth through
development of new markets
Promote existing employees
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
effectiveness through process
improvement
Encourage work teams to be
innovative
Take risks
Assume a long-term perspective
current situation and future vision, engagement of line managers, identification of HR constraints and opportunities, and creation of common bonds
(Gomez-Mejia, Balkin, and Cardy 2012).
The SHRM Process
As illustrated in Exhibit 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
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C h a p ter 1: Strategic H um an Resourc es Managem ent
Old HR Practices
Current HR Practices
Job Analysis/Planning
Explicit job descriptions
Detailed HR planning
Detailed controls
Efficiency
Broad job classes
Loose work planning
Flexibility
Innovation
Staffing
Supervisors make hiring decisions
Emphasis on candidate’s technical
qualifications
Layoffs
Letting laid-off workers fend for
themselves
Team makes hiring decisions
Emphasis on “fit” of applicant
within the culture
Voluntary incentives to retire
Providing continued support
to terminated employees
Training and Development
Individual training
Job-specific training
“Buy” skills by hiring experienced
workers
Organization responsible for
career development
Team-based training
Generic training emphasizing
flexibility
“Make” skills by training
less-skilled workers
Employee responsible for
career development
Performance Appraisal
Uniform appraisal procedures
Control-oriented appraisals
Supervisor inputs only
Customized appraisals
Developmental appraisals
Appraisals with multiple inputs
Compensation
Seniority
Centralized pay decisions
Fixed fringe benefits
Employee Rights and Discipline
Emphasis on employer protection
Informal ethical standards
Emphasis on discipline to reduce
mistakes
Employee and Labor Relations
Top-down communication
Adversarial approach
Preventive labor relations
Performance-based pay
Decentralized pay decisions
Flexible fringe benefits
(i.e., cafeteria approach)
Emphasis on employee
protection
Explicit ethical codes and
enforcement procedures
Emphasis on prevention to
reduce mistakes
Bottom-up communication
and feedback
Collaboration approach
Employee freedom of choice
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EXHIBIT 1.3
Strategic HR
Trends
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external changes. The internal components of the organization are affected
by these changes, so the organization’s plans may necessitate modifications in
the internal systems and HR process systems. Harmony among these systems
is necessary. 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 organizational
strategies (i.e., external alignment) (Ford et al. 2006).
HR systems are also significantly affected by forces in the external
environment as well as factors within the organization (Lengnick-Hall et al.
2009). When a healthcare organization systematically understands, creates,
coordinates, aligns, and integrates all of its policies and practices, it creates an
HRM system. Many HR policies and practices working together are necessary to get best results (Subramony 2009).
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 labormarket realities, 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.
Healthcare executives need to assess not only their organizational
strengths and weaknesses but also their internal systems; their human
resources’ skills, knowledge, and abilities; and their portfolio of service
markets. HRM 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 services 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 chosen market must be identified. The methods adopted are based
on internal resources available, or potentially available, for use by managers.
As shown in Exhibit 1.4, strategies should consider environmental
conditions and organizational 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 accurate assessment of the organization’s ability to perform
in the marketplace at the desired level.
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C h a p ter 1: Strategic H um an Resourc es Managem ent
13
EXHIBIT 1.4
SHRM Model
Internal Assessments
• Strengths
• Weaknesses
• Portfolio of service
markets
• Human resources’
skills, knowledge,
and abilities
• Internal systems
Organizational
Mission
• Purpose
• Mission
• Business unit
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
HR Strategy
Implementation
• Management
of external and
interface
stakeholders
• Management
of internal
stakeholders
• HR practices/
tactics to
implement
(e.g., adequate
staffing)
Organizational
Strategy
Formulation
• Corporate
• Business
• Functional
Environmental
Assessment
• Opportunities
• Threats
• Services/markets
• Technological trends
• Legal/regulatory
climate
• Economic conditions
• Labor markets
Formulation of
Other Functional
Strategies
• Accounting/finance
• Marketing
• Operations
management
Implementation
of Other Functional
Strategies
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
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Hu m a n Re so u rc e s i n H e a l th c a re
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 recognize the critical links between HR and organizational goals. As
seen in Exhibit 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 HRM, the HR manager’s job is to help operating managers
achieve their strategic goals by serving as the expert in employment-related
activities and issues.
The implementation of an organization’s strategy through HR has
become more and more dependent on technology. Today, most Americans
use mobile phones, many of which have thousands of applications that make
the phones “smart.” Healthcare organizations have quickly realized that
HR applications can help them manage their employees more effectively by
increasing operational efficiency and meeting expectations of different generations in the workforce. Mobile devices make it easier to deliver services,
provide information to job applicants, offer training modules, manage interview skills, and coordinate work arrangements (Rafter 2010).
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
effectively fulfill its purpose. The mission statement often provides subtle
clues on the importance the organization places on its human resources. The
purpose and mission affect HR practices in obvious ways. A nursing home,
for example, 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 doing
a SWOT (strengths, weaknesses, opportunities, and threats) analysis. The
managers then attempt to use the organization’s strengths to capitalize on
environmental opportunities and to cope with environmental threats. Human
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C h a p ter 1: Strategic H um an Resourc es Managem ent
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 corporate level, the business level, and functional levels. Corporate strategy is a
set of strategic alternatives that an organization chooses from as it manages
its operations simultaneously across several industries and markets. Business
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 functions
(i.e., marketing, finance, and HR).
A key challenge for HR managers when the organization is using a
corporate growth strategy is recruiting and training the 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 incoming employees. In Exhibit 1.4, the two-way arrows connecting
“Organizational Strategy Formulation” with “HR Strategy Formulation”
and “HR Strategy Implementation” indicate that the impact of the HR
function should be considered in the development of organizational strategy.
When HR is a true strategic partner, all organizational parties consult with
and support one another. Consequently, the two-way arrows from “Organizational Strategy Formation” indicate the parties that should also be considered in formulating an organizational strategy.
HR Strategy Formulation and Implementation
Once the organization’s corporate and business strategies have been determined, 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
incentives).
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
development of the corporate and business strategies so that staffing activities mesh with other strategic elements of the organization. For example,
if retrenchment is part of the business strategy, the staffing strategy will
focus on determining which employees to retain and what process to use in
termination.
A developmental strategy helps the organization enhance the quality of
its human resources. This strategy must also be consistent with the corporate
and business strategies. For example, if the organization wishes to follow a
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Hu m a n Re so u rc e s i n H e a l th c a re
strategy of differentiating itself from competitors through customer focus
and service quality, it will need to invest heavily in training its employees to
provide the highest-quality service and to ensure that performance management focuses on measuring, recognizing, and rewarding performance—all of
which lead to high levels of service quality. Alternatively, if the business strategy is to be a leader in providing low-cost services, the developmental strategy may focus on training to enhance productivity to keep overall costs low.
A compensation strategy must also complement the organization’s
other strategies. For example, if the organization is pursuing a strategy of
related diversification, its compensation strategy must be geared toward
rewarding employees whose skills allow them to move from the original business to related businesses (i.e., inpatient care to home health care). The organization may choose to pay a premium to highly talented individuals who
have skills that are relevant to one of its new businesses. When formulating
and implementing an HR strategy and the basic HR components discussed
earlier, managers must account for other key parts of the organization, such
as organizational design, corporate culture, technology, and the workforce.
Organizational design refers to the framework of jobs, positions,
groups of positions, and reporting relationships among positions. Most
healthcare organizations use a functional design whereby members of a specific occupation or role are grouped into functional departments such as OBGYN, surgery, and emergency services. Management roles are also divided
into functional areas such as marketing, finance, and HR. The top of the
organizational chart is likely to reflect positions such as chief executive officer
(CEO) and vice presidents of marketing, finance, and HR.
To operate efficiently and allow for seamless service, an organization with a functional design requires considerable coordination across its
departments. Many healthcare organizations have been moving toward a flat
organizational structure or horizontal corporation. Such an organization is
created by eliminating levels of management, reducing bureaucracy, using
wide spans of control, and relying heavily on teamwork and coordination to
get work accomplished. These horizontal corporations are designed to be
highly flexible, adaptable, streamlined, and empowered. The HR function in
such organizations is typically diffused throughout the system so that operating managers take on more of the responsibility for HR activities and the HR
staff play a consultative role.
Corporate culture refers to the set of values that help members of
that culture understand what they stand for, how they do things, and what
they consider important. Because culture is the foundation of the organization’s internal environment, it plays a major role in shaping the management of human resources, determining how well organizational members
will function together and how well the organization will be able to achieve
its goals. There is no ideal culture for all organizations, but a strong and
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C h a p ter 1: Strategic H um an Resourc es Managem ent
well-articulated culture enables employees to know what the organization
stands for, what it values, and how to behave. A number of forces shape an
organization’s culture, including the founder or founders, institutional affiliations, shared experiences, symbols, stories, slogans, heroes, and ceremonies.
Managers must recognize the importance of culture and take appropriate care to transmit that culture to others in the organization. Culture
can be transmitted through orientation, training, consistent behavior (i.e.,
walking the talk), corporate history, and telling and retelling of stories. Culture may facilitate the work of either HR managers or line managers. If the
organization has a strong, well-understood, and attractive culture, attracting
and retaining qualified employees become easier. If the culture is perceived
as weak or unattractive, recruitment and retention become problematic.
Likewise, the HR function can reinforce an existing culture by selecting new
employees who have values that are consistent with that culture.
Technology also plays a role in the formulation and implementation of
an HR strategy. The HR activities of healthcare organizations are different
from those in the manufacturing industry. In healthcare, different criteria for
hiring and methods of training are used. In addition, healthcare organizations typically emphasize educational credentials. Many aspects of technology
play a role in HR in all healthcare settings. For example, automation of certain routine functions may reduce demand for certain HR activities but may
increase it for others. Computers, robotics, and social media are important
technological elements that affect HRM, and rapid changes in technology
affect employee selection, training, compensation, and other areas.
Appropriately designed management information systems provide data
to support planning and management decision making. HR information is
a crucial element of such a system because this information can be used for
both planning and operational purposes. For example, strategic planning
efforts may require data on the number of professionals in various positions
who will be available to fill future needs. Internal planning may require HR
data in categories such as productivity trends, employee skills, work demands,
and employee turnover rates. The use of an intranet (an internal Internet that
is available to members of an organization) can improve service to all employees, help the HR department, and reduce many routine administrative costs.
Finally, workforce composition and trends also affect HR strategy formulation and implementation. The American workforce has become increasingly diverse in numerous ways. It has seen growth in the number of older
employees, women, Latinos, Asian Americans, African Americans, foreignborn workers, individuals with disabilities, single parents, gays, lesbians, and
people with special dietary preferences.
In 2012, approximately 34 percent of the US workforce were minorities, including African Americans (12 percent), Asian Americans (5 percent),
Hispanics (15 percent), and other minorities (2 percent) (Bureau of Labor
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Hu m a n Re so u rc e s i n H e a l th c a re
Statistics 2012). In some sectors of healthcare (e.g., nursing homes), minorities compose more than half of the labor force. Women with children younger
than age six are now the fastest-growing workforce component (Bureau of
Labor Statistics 2012). These trends are likely to accelerate in the future.
Previously, most employers observed a fairly predictable employee pattern: People entered the workforce at a young age, maintained stable employment for many years, and retired at the usual age—on or around age 65.
This pattern has changed and continues to evolve as a result of demographic
factors, improved health, and the abolition of mandatory retirement.
Most companies today have workforce populations that fall into four
generations: traditionalists, baby boomers, Generation X, and millennials
(also known as Generation Y) (Twenge et al. 2010). Each generation has
grown up in different environments that have shaped its members’ attitudes
and values toward work. HR professionals must therefore be aware of such
values and attitudes and their possible impact in shaping HR policies and
practices. While not everyone within each generation shares the same values
and attitudes, the generations do tend to have distinctive characteristics (Pew
Research Center 2010) (Exhibit 1.5).
A common guideline for HR professionals in dealing with a multigenerational workforce is to assume both similarities and differences exist, seek
to understand them, and develop appropriate programs. Most HR policies
should be formulated to appeal to a wide variety of employees.
As mentioned earlier, the successful implementation of an HR strategy
generally requires identifying and managing key stakeholders (Blair and Fottler 1990, 1998). These stakeholders may be internal (i.e., employees), interface (i.e., physicians who are not employees), or external (i.e., third-party
payers). The HR strategy, as we…
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