Layoffs: Avoiding Implosion

Reductions in Forces (RIFs) are a fact of life in most industries. Over the years we’ve read of large reductions in employee numbers. To make them more palatable, it may be called “downsizing” or, to make leaders feel better, “right sizing”…. I don’t feel the employee being asked to leave ever feels like it’s right sizing.

RIFs are unfortunately a fact of life. In health care, we take our employee layoffs very emotionally, as we should. Other industries are much more accustomed to these layoffs. However, even the smallest RIF in health care has a huge impact that ripples throughout the entire organization.

In health care, when reductions are imminent, organizations have an opportunity to either move the organization forward or implode. The size of the reduction, while important, isn’t the biggest factor on how those that stay with the organization react, but the manner of communication is. The communication to the staff and physicians is crucial.

If not done well, the most common immediate reaction by the front line staff is that the reduction is the administration’s fault. However, in my travels and observations of reductions, the senior leaders have fought like heck to avoid them. They’ve spent days, nights, and weekends looking at options to keep the reduction as low as possible. The senior leaders only look at reductions after other efforts to achieve desired outcomes have been tried. RIFs can take place even in well-run organizations.

Why do RIFs occur? Here are few reasons:

1. Technology changes. A new device makes a procedure obsolete. Staff in those areas is impacted. At the very least, more care is done on an outpatient basis. An upgrade in the information technology means more efficient operations. Either way less staff is needed.
2. Migration of hospital services to physicians’ offices. Technology, grouping of physicians thus access to capital means that what hospitals did before now can be done in physician offices or other health care entities such as imaging centers. Again this means less staff is needed at the hospital. Some staff may move to these new settings but pay and benefits may not equal what they had in hospital.
3. Increase in competition as other hospitals expand their services. A hospital is the only heart surgery hospital and then a nearby hospital starts a program. While one hospital is hiring heart staff, the other is reducing staff.
4. Expense creep that may follow good years. FTE’s may gradually increase when the revenues are up and staff was hired. Now with patient volume down less staff is needed.
5. Bad debt and charity care increases meaning more care but less collections. Something has to give. It can mean some jobs will go.
6. Streamlining. In health care our DNA calls for us to always look for ways to improve operations, sometimes improved efficiency means less people needed.

Can senior leadership rollout these reductions without imploding but gain trust with staff? Yes, I’ve seen it done. Here are some tips:

1. Don’t exaggerate the reduction. There is a tendency to include in the numbers those positions that are already unfilled or may be lost to natural attrition so as to let some stakeholders know you have dug deep. Keep the list to actual people that will be asked to leave.
   • For example, I spoke with a CEO who said they were reducing their force by 120. When I asked how many bodies, it was less than 40. The large number included current vacancies that were not going to be filled but in budget, and others were being done through attrition by not replacing staff who were retiring or leaving for other reasons.
2. Audit where reductions are made. May not seem right and won’t change some front line staff layoffs but reductions in senior leadership and other management areas must make up some of the reductions. Otherwise front line staff feels that management is not also sharing the pain.
3. The CEO must make sure senior executive team is on the same page and understands the communication plan. They must know the key talking points – what to say, to whom and when. If one senior leader gets out in front of others, then the feeding frenzy begins. Also have a prepared response just in case there are any calls from the media to reassure the community. Or if you feel media will be interested, integrate media as part of the process.
4. The CEO needs to rollout the plan to the managers, key physicians and then immediately personally to all employees. He must first share what has been done to lessen the reduction so that staff understands their efforts haven’t been wasted.
   • A CEO I know shared the reduction but also went over the positive actions over the past 4 years in new program growth, reduction of agency, etc. He showed that it was sad that reductions were being made, but the number, which was under 50, could have been as high as 300. Thus, their hard work kept 250 people working. By working together they may not avoid reductions due to things outside their organization’s control – like reimbursement issue and new technology – but they can keep reductions lower by continuing their progress.
5. The CEO also explain what would happen if the RIF wasn’t implemented – financial losses, loss of market share and even larger staff reductions.
6. Outline specifically where the reductions will be and what the managers will be doing. Give them a timeline to reduce anxiety of when people will hear and how.
7. Explain what is being done for the employees who are being let go. Outline how the people exiting will be treated, such as severances, out-placement, etc. This is crucial for staff that will be thinking of those leaving, but also wondering what if this was me. One CEO had other healthcare organizations come onsite and set up interviews with those being let go. This was a huge win for everyone.
8. Let the employees left know what they can do to make the organization stronger, such as improve physician services, select and orient new hires better and reduce patient no-shows for visits.

While reductions are gut-wrenching experiences, they are, at times, necessary to assure the organization has the ability to continue to fulfill its mission to provide care. In fact, to not make such moves may put the organization, thus its mission, in jeopardy.

We all work to build a sense of team, and reductions in workforce can erode the trust and confidence levels in the organization. The above suggestions may not cover all the points on how to deal with this difficult task, but they are a solid start for your communication plan.

If you would like us to put you in touch with an organization who has handled this situation without losing its forward progress, please e-mail me direct at quint@studergroup.com.

Also, please add your comments to this blog and share with our readers your experiences with reductions in forces – what worked and what didn’t. We can all benefit from each other’s experiences.

Cut Out The Middle Man

From time to time, I notice that many of us let ourselves become the middle man in the lines of communication within our organization. A department head has an issue with another department head. Instead of discussing the problem with the co-worker responsible, the person comes to you and asks you to relay the issue. I have found in health care, we want to be helpful. We try to handle the situation by saying, “I’ll go talk to that department head’s VP.” or “Let me talk with the other department head myself.” The correct response is “Have you spoken to that person yet?”

Organization charts are great for job descriptions and developing teams, but they aren’t the best for communication. Let me give you my real life example:

It is 1993; I’m the COO of Holy Cross Hospital in Chicago. The Chief Nurse Officer doesn’t report to me, but there are a few things I think she could do a little bit better and I’m sure there are a few things she feels I could do better. So during a supervisory meeting with my CEO, I find a little opening to mention my observations to him. Because the CNO reports to him, I share some concerns I have about what’s going on in nursing.

And I really think I presented it quite well. I wait for the CEO to say, “Quint, let me talk to her.” Instead, he turns to me and says, “Quint, those are good observations. What did she say when you told her this?”

There was silence. And then he said these words that could be interpreted as “It’s time to grow up.” He said, “Quint, I’ll tell you what. It’s best if you talk to her directly because you’re both adults. You’re both leaders, and if you can’t resolve this then both of you can come to see me and we’ll discuss it together.”

Now I had two options. I could either go through the pain of discussing my observation or endure the pain of not discussing my observations and not realizing the outcomes. For most people, the pain of not confronting is worse than confronting. I went to talk to her. Not only was I taught this skill but also we all were – we learned to talk to each other. That is why Holy Cross Hospital won the 1994 AHA Great Comeback Award.

We all need to learn to have adult conversations in the workplace. It’s easy to grumble and gripe or ask someone else to convey our messages, but problems don’t get resolved that way. Usually the opposite happens: they magnify and come to involve more people than necessary in their resolution.

How to Cut Out the Middle Man

1. Don’t let yourself be used as the go-between, even though your natural tendencies are to help others and solve problems. Push the parties to talk directly and offer to help if they can’t work it out between themselves. Most often they can and will thank you for bringing them together.
2. If someone comes to you saying that he represents a group, ask the person who is being represented? Do the members of the group know you’re representing them? About 99% of the time, the person will say, “No.” Then you ask that person to speak for himself. This will cause some discomfort, but the message will get back that people need to carry their own messages.
3. If a leader says that people can’t come directly to you with the excuse “that you’re too intimidating,” meet the excuse head on. Tell the person that you want to be more approachable and ask for help so that you can understand what you can do to be more approachable. This is a “win-win.” Either the person will admit the issue is his,or you will get constructive feedback. You have taken away the excuse.