Editor’s Note: John is taking a writing day off. This post originally appeared on July 31, 2013. Given the accelerating pace of health system and hospital consolidations, and reports of additional layoffs, this post contains some important issues concerning layoffs.
That question is not if, but when and how many.
Layoffs. They are inevitable in the new healthcare economy that will be defined over the next five to seven years by the impact of the Affordable Care Act and the inevitable deficit reduction through cuts in reimbursement for Medicare, Medicaid and, ultimately, commercial payors.
These reductions in the workforce will come as the result of mergers and other consolidations as well as CEOs looking to trim expenses in order to maintain acceptable operating margins. The top-performing
CEOs see it coming and they are already making adjustments, much like a major league baseball player adjusts his swing when he knows that the next pitch will surely be a 95-mile-per-hour fastball.
Most major league hitters can hit virtually any fastball that is in the strike zone regardless of speed when they know, or guess correctly,that it is coming. They make adjustments, and frequently, there are good results.
There is really not much debate on whether healthcare is going to deal a fastball. The real question is what should the employer do for the employees who will be asked to exit the organization to reduce costs.
Here are three points for healthcare CEOs and their HR leaders to consider. I know I have written about this before, but given where we are in the game, I thought this would be a good time to revisit:
- Protect Your Recruiting Brand – How an organization treats its departing employees is noticed, by the survivors as well as employees of competing organizations. Showing workers the door without any apparent concern for their immediate future is a dead bang bad idea.
- Use Cost Effective Outplacement – While employees prefer to get as much severance cash as they can, offering a mix of salary, benefit payments and a cost-effective outplacement solution may actually cost less and sends an important message, we care about you and your future, says Nancy Swain, President of Strategic Intelligence and a JohnGSelf strategic partner. Ms. Swain has designed an online program that has proven both cost-effective and beneficial for employees.
- Haste Makes Waste – Far too many companies practice what I call speed terminations. There is no advance communication with the employees. Once the decision is made as to who will go, the company rushes to get those people out the door as fast as possible, as if they are contagious. Compassion? Concern? No time. The conventional HR wisdom is that employees who have been selected to leave could sabotage critical operations or equipment. Wait a minute. These people have a lot of information – about the good and the bad of the organization. What better time to ask them to share this – no harm, no foul. It is also a good idea to talk about boomerangs, those employees who will return one day. There will be better days and there will be future retirements and resignations, in other words, job openings. There has never been a layoff that did not include some good employees. Do not lose that talent because speed termination seemed like a good idea at the time.
While these will be challenging times for senior leaders we all know, given the circumstances of the game, that a fastball is surely on its way, it just may, or may not, be in the strike zone.
About JohnGSelf + Partners
John Self is President Managing Partner of JohnGSelf + Partners, an executive search and talent management advisory firm with team members in Dallas, Houston, New York and Detroit. JGS+P provides solutions to health systems, hospitals, home care, hospice and other providers with a suite of talent management services, from vision-values based executive and physician search, interim executives, outplacement, executive coaching as well as advisory services in the areas of talent planning, governing/medical staff/executive alignment, and strategic counsel. In addition to writing the blog and hosting a podcast, John is a respected speaker. To learn more, contact the firm: firstname.lastname@example.org .