In today’s economy, organizations are supposed to treat employees almost as free agents, with low expectations of loyalty on either side. The concepts of lifetime employment and generous employee benefits are seen as old-fashioned throwbacks to paternalism.
But paternalism works — even in the twenty-first century, and even in an industry undergoing disruption. My own workplace is an example.
In the 15 years since I joined Scripps Health, we haven’t laid off anyone. That isn’t the norm in my industry, obviously. Hundreds if not thousands of hospitals have responded to trends such as shorter average hospital stays, fewer surgeries, a shift to outpatient and home care, and reduced reimbursements by consolidating or overhauling their operations and laying off staff.
We’ve certainly had to change too. Sometimes that’s meant eliminating positions, but we didn’t tell the affected employees to leave. A small minority voluntarily left Scripps, but most went elsewhere in the organization. When we were aiming to close a small chemical-dependency hospital in 2013, for example, we looked hard into unmet needs in the area. We decided to simultaneously start a new outpatient clinic nearby, and that’s where the hospital staff ended up.
We believe a no-layoffs philosophy is good for employees’ physical and psychological health — it’s well known that job insecurity can be harmful. And it’s with employees’ health in mind that we also offer generous benefits: Our insurance, wellness, and employee-assistance programs are more extensive than those of most health systems. We want our people to focus on patients, and they can’t do that unless their own health or family concerns are taken care of.
We support these policies through three key practices:
A preference for insiders. We rarely hire from the outside. Employees whose positions have been eliminated go through our Career Resource Center, where they’re trained for other open positions. When our marketing department needed two new people, it kept the positions open for a while in order to take on two employees coming through the CRC from departments that were shrinking. Neither had much marketing experience, but we invested in their development, and after retraining they moved over. Our bias toward insiders means sacrificing some flexibility in hiring. But the added employee motivation more than makes up for that shortcoming. And we haven’t suffered financially: Fifteen years ago we were losing $15 million a year and physicians had just voted no confidence in management. In recent years we’ve had a balanced budget, a AA bond rating, and a unified organization.
Serious accountability. Although we won’t fire you if you’re redundant, we will fire you if you fall short of the goals we develop with you. We’ll give you a lot of training and support, but at the end of the day, we’re all about meeting the needs of patients in a sustainable way. We can’t do that if our employees aren’t performing. So we do let some people go. That includes executives. I tell my senior team that they can miss their annual targets once, but if they don’t turn around their operations quickly, they won’t be here to miss them a second time. So far we haven’t had to fire any executives for missing their targets, although one of them did have to report monthly to the board on his remediation plan until the numbers turned around.
Frontline connections. We’ve worked to avoid the kind of blame-driven, watch-your-back culture I’ve seen in some organizations. We do that by connecting the front line with management in a continuing dialogue. We want all of our employees to understand the larger concerns and priorities of their hospital, clinic, or administrative department, to know how their jobs matter, and to feel free to ask questions of their supervisors. We even offer reluctant managers cue cards to help them start conversations. As a result, employees and managers throughout Scripps feel connected not just to their work buddies but to the overall organization, and employees partner with management to solve problems.
There has been a lot of talk over the years about making nonprofit organizations more businesslike. I’m all for giving nonprofits more financial discipline and planning, but that doesn’t mean they should treat employees like quasi-free agents. I’ve seen what it’s like to carry out mass layoffs — I had to do that in the 1990s at a hospital that was in bad financial shape. I vowed never to let myself get into that position again.
Instead, nonprofits need to match institutional discipline with authentic goodwill toward employees, developing effective employee-assistance and wellness programs and eliminating anxiety about job security. Who knows? If enough nonprofits master this balancing act, then maybe we can teach the for-profit world something for a change.
Source: Harvard Business Review, Chris Van Gorder