There is opportunity for expense reduction with our people assets in many healthcare businesses and I am NOT talking about cutting salaries or benefits. For health systems, hospitals and other healthcare provider organizations looking to improve expense management of their human capital, one important answer can be found in developing a best-in-industry integrated onboarding program.
In some hospitals and healthcare organizations, the expense reduction potential is so plentiful that it is hard not to step on the low hanging fruit.
Why is onboarding the answer? Onboarding brings to the executive table a sense of strategy, focus and financial discipline in terms of talent acquisition and management that cannot be achieved by any other method. It also drives some important so-called hidden benefits.
In measuring the potential for your organization, you first need to focus in on your real cost of turnover. As a former hospital, EMS system and homecare pharmacy CEO, I cannot think of a good reason not to come to grips with this number. I will always remember the face of a CEO, when he was told by his CNO, and affirmed by the CFO, that the cost of nursing turnover – which at the time was running at 18 percent – was on average, $60,000 per nurse. He was stunned. When he did the math, he was appalled. Nurse turnover was costing his organization more than $7.8 million a year. When he combined the nursing division with other departments, where the turnover was admittedly much lower, his costs were more than $8.8 million.
A high turnover rate is one important measure by which you judge whether a comprehensive integrated onboarding is a smart investment for your organization. However, as the television hucksters like to shout, “But wait, there is more…”
There are other benefits that will produce significant improvements that will trickle down to healthier margins from implementing an integrated onboarding program. They include:
• Creates a framework of discipline for all the organization’s recruiting
functions. This translates into an improvement in the number of quality hires your organization makes. In an era when the war for talent will determine the winners and losers in a market, winning this battle for the best employees is mission critical. Better employees equal better results.
• Improvements in recruiting will result in lower cost-to-hire benchmarks as you rely less and less on external recruiters to identify managers, director-level candidates. Why pay fees of 25-30 percent of the first-year base salary when essentially what you receive from far too many recruiters is a resume? There IS a better, less costly way!
• Surveys show that more than 40 percent of hires produced by external recruiters – in all sectors at all levels — quit, are forced out or are fired within 18 months. That is an astounding little secret that the recruiting industry would just as soon that you not know or act upon. (At JohnMarch Partners, our record of success is 4 times better than the national average.) A comprehensive, integrated onboarding program can help you dramatically improve your success rate in recruiting.
• The war for talent has already shown its ugly head with physician recruitment. Physician recruiters will certainly agree on that point. Recruiting clinical physicians is an extremely difficult, expensive and frustrating process, given the fact many physicians do not approach this from a business perspective. They may commit to your organization and change their mind – two or three times – without even bothering to tell you. Once you wrap up a deal, you not only have the Return on Investment target to achieve, but you also must protect the investment from poachers – other recruiters who will call weeks, months or years later and offer a better deal. A comprehensive, integrated onboarding program that creates an emotional family-like tie to your organization and helps protect this investment is one of the most inexpensive strategies available. Moreover, when a properly structured onboarding program is applied to physician recruiting, it takes the CEO and physician recruiter out of the unenviable role of being pressured by a big admitting physician who sometimes is less concerned with the government’s rules than the money (income guarantee). Moreover, it establishes a foundation for the medical executive committee and their representatives on the physician recruitment panel to clearly define what is, and what is not, acceptable. Given the federal government’s determination to go to the mat in investigating and prosecuting Medicare fraud, creating a comprehensive onboarding plan that establishes a formal structure for physician recruiting and includes all new physicians who join your medical staff, you are missing a potentially significant opportunity that most hospitals cannot afford to put off.
When you do the math – add up the direct savings from reduced turnover, etc. – and factor in the indirect cost management benefits of having better, more productive and empowered workers who make an emotional commitment to your organization, this proposition is, to borrow a sports phrase, a real easy “slam dunk.” A comprehensive integrated onboarding program is one of the few easy win-win decisions a Chief Human Resource Officer can recommend to his or her CEO.
Finally, when you select a consultant to design and implement your onboarding program, be sure they understand – deeply understand – human talent acquisition and talent management. Not every human resource consultant or organizational development specialist understands recruitment. The recruiting process is such an important part of the onboarding program.
You will not achieve the results you seek without a gold-plated recruiting program.