Measurement: The Human Side of the Equation

Healthcare Industry

Health care has changed dramatically from previous years.  Many health care organizations are faced with challenges to streamline processes and become even more efficient.  Some of the most prevalent items effecting health care over the years include; Health Maintenance Organizations (HMOs), the Balance Budget Act (BBA), government cuts, increase Medicare regulation, the formation of health care systems and alliances, the electronic health record (EHR), shortages in nursing and other key positions, unions and union strategy, increased numbers of uninsured, the aging population, and of course, health care reform.

         

With the ongoing challenges in health care, it is necessary that health care organizations become increasingly focused on efficient operations, simultaneously providing quality services and service outcomes.  

Our Role

 As human resource professionals, our role should be primarily focused on increasing our strategic partnership in corporate strategy, planning, and business operations.  Finding ways to focus on talent management, succession planning, retention and increase productivity are key essentials in remaining competitive.  HR can assist in helping our organizations to become more efficient through human capital measurement.  The process of measuring human capital in health care seems to be very sensible, since human capital expenditures may average around 65-70% of total operating expenses.

 

Metrics Usage

An HR metric system is a process of gathering data and measuring the data to demonstrate the value of an organization’s human capital.  If properly utilized, along with other operational metrics, it can enable us to become more efficient by displaying the true facts of operations and ensuing all human capital investments include a return.  The return could be tangible or intangible, but it should require a return.  HR metrics can display a true snapshot of the organization and it’s makeup.  It can show movement within and out of the organization, educational attainment, diversity, skills and training needs, recruitment costs, and employee satisfaction and engagement.  There are a host of things that HR metrics can reveal about an organization.  Metric data can also show possible outcome correlations and causations.   Commonly used metrics can be used for comparison and benchmarking with world-class organizations.  It can help us to become a more leaner and productive organization. 

Challenges

With the many uses of data, there can be some challenges as well.  Some of the challenges include obtaining the right data, analyzing the data appropriately, and using the information to drive change.  There is a tremendous amount of data available.  Some of the data available may be limited in scope, fragmented, incomplete, or not considered an apple-to-apple comparison.  The sheer volume of data can be overwhelming.  Some leaders find it difficult to connect the dots and this limits their ability to make informed decisions on where to invest their resources.  It also limits their ability to determine possible outcomes or returns.      

           

The Future of Human Capital Measurement

Towers Watson, an organization built on more than a decade of workforce analytics and human capital metrics, researched heavily into workforce behavior and business outcomes.  They developed an actionable measurement framework based on connections across four critical areas. 

§     Investments in people systems and programs (reward programs,   leadership development, performance management)

§    Employee behavior (engagement, absenteeism, turnover, productivity)

§    Customer behavior (customer loyalty, market share, customer satisfaction)

§    Financial performance (revenue growth, net earnings, share price)

Many organizations are beginning to recognize the potential benefits.  Some have adopted a portion of human capital measurement but have not grasped the total concept by committing to the process completely.  In health care, the process involves many disciplines, which include but not limited to, HR, finance, clinical, quality, strategy and planning.  It involves human, financial, clinical and process measures and can be a tremendous asset in evaluating overall business operations.  The future of human capital measurement will depend on our ability to make the true connection between measurement, outcomes and its effect on the bottom line. 

   

Important Factors to Consider

Commitment from senior level executives - A common factor as all major initiatives, human capital measurement requires a commitment from senior level officials.  It should be linked to the organization’s strategic objectives. 

Common Systems.  Without common systems in place, collecting data could be manual work.  Having common systems creates efficiency by reducing time and rework.  It can also increase the speed of collecting the data and the overall accuracy of the data. 

Common Definitions - Creating and identifying common definitions are extremely important as well.  There should be a common definition for each metric.  For example, the definition of a manager could have several different meanings, depending on the organization.  Common definitions help us to compare apples to apples.  Using standardized industry definitions allows us to benchmark and compare data with other organizations. 

Effective Communication and Collaboration – Sharing information between inter-disciplines are needed to connect information.  Being transparent and sharing the information with staff and stakeholders can be a highly effective tool when faced with making difficult decisions.  Transparency highlights our strengths and identifies areas of opportunity.  The more information that is shared, the better the opportunities to showcase the organization externally and to continuously improve internally.   

Benchmark Data – Human capital measurement includes internal and external data.  It is important to compare ourselves with similar and sometimes non-similar organizations.  Benchmarking helps us to seek best practices.  The main objective is to optimize performance, outcomes and results.  Adopting practices and learning from others increases the likelihood.   

Census Information - Information from the U.S. Census can provide a snap shot of our current customers and employees.  It can also provide trends on future customers and future employees.  The demographic information can be extremely useful in strategic organizational decisions. 

U.S. Census

On December 21, 2010, the U.S. Census released its first overall results of the 2010 Census.  It was revealed that the U.S. population increased 9.7% over the 2000 Census.  The resident population of the United States on April 1, 2010 was 308,745,538.   Detailed State information is set to be released starting in February 2011.  This information will provide organizations current information for future decisions.

Common HR Measurements in Healthcare

Below is a list of common HR metrics in healthcare.  The list is not all-inclusive. 

Employee satisfaction/engagement

Employee turnover                     

Exit interviews

Vacancy rates              

Training hours and cost                

Promotions

Agency usage costs

Tuition reimbursement expenses

Total salary costs

Total benefit costs

Diversity

FTEs per adjusted patient days

Paid hours per adjusted patient days

New hire turnover

Staff competency

Recruitment costs

Cost per hire

Days to fill a position

Turnover costs

Average age by profession

One of the newer HR related metrics include “Boomerang employees.”  This particular metric measures employees who leave the organization for various reasons yet return as a rehire.  These employees can be useful in delivering messages and positive reinforcement to company culture.  “The grass is not always greener on the other side.” 

I strongly believe that the human side of business will become the most important competitive advantage.  Competitors can duplicate most other advantages.  It will be the human component that distinguishes businesses from others.  The core organizational culture, the human side of business, will be more difficult to duplicate, therefore creating the competitive edge.     

~ Joseph Conrod Sr. SPHR

In the "mean time"

Last year came and went extremely fast.  It seems like it was only a few years ago when the huge media hype exploded worldwide regarding year 2000 and the possible effect on computerized equipment.  There was so much preparation and build-up for year 2000, that it totally consumed us.  Needless to say, the New Year came without any glitches and life went on as usual.  It’s very difficult to believe that this was eleven years ago.  Where did the time go? 

This leads us to the next predicted phenomenon of December 21, 2012.  This date is the last date of the 5,125 year long cycle according to the Mayan Calendar.  It is predicted that cataclysmic or transformative events will take place on this date.  Others suggest that the 2012 date marks the end of the world.  As we move closer to this date, more media hype is expected.  Once the date comes and passes, I’m sure another predicted phenomenon will begin to surface.

Each year, we make new resolutions and set new personal and professional goals in hopes that the New Year will be much better than the last.  Somehow by mid-year, we either forgot about the goals we set previously or they no longer seem as important.  At the end of the year, we look forward to setting new goals for the next year and the vicious cycle repeats itself.
 
As usual, at year-end, the television media reflects back on all the famous people we lost over the entire year.  It entices us to reflect back on our own personal losses as well.  When we reflect back on our personal losses, it reminds us of our own mortality. 

Not to sound so gloomy, but by the end of this New Year, some of us will not be around to celebrate 2012.  We were born in this world on a temporary basis.  If we’re lucky, some of us will live through infancy, childhood, youth, adult, and maturity.  Some of us will not be so fortunate and will fall victim to illness, accident or some other form of early death.

                   I--------------------------------------------------------------------I

               Birth                         "Mean Time"                    Death

                                                    (Life)

I like to look at life as a time line.  It is a time line between our birth and our death.  Life can be referred to as our mean time, in between time (birth and death).  Our mean time is the only time that we really control.  We can't choose our parents or families.  We can't choose our death, unless it is intentional.  As a matter of fact, if we had a choice, most would choose to be young and live forever.  Reality tells us that the legacy we leave is based on how we spend our mean time. 

Most of us strive to be great family oriented individuals and hope that we have a positive impact on individuals in our inner circles.  The question is, how do we reach further and go beyond our inner circles?  How can we transform something much larger and have a greater impact? 

We spend a considerable amount of time working for or behave of our employers.  In addition, some of us simultaneously are a part of other organizations in which we commit time, as well.  The fact of the matter is that we spend a majority of our mean time working.  As HR professionals, it is imperative that we understand the human element of HR and how we can be the catalyst for change in our organizations.  We have the ability to impact our organizations tremendously through our emphasis of the human side of the equation and how it effects the bottom line.  It is an undertaking in which I believe we are required to take. 

 Work is done through people.  It is purely the human element and our ability to effectively manage it that makes all the difference.  It is through our work or lack there of, in which we can either extend our reach to have the greatest impact to our organizations or we can remain stagnant.  We have the ability to make larger transformations and leave legacies unimaginable.  We have the power.    

I personally challenge you to maximize your mean time and leave a legacy that extends far beyond your inner circle.  As HR professionals, I feel that it is our role to be the catalyst for change and one of the primary leaders in catapulting our organizations to excellence.  The power is within us.  We just need to first, recognize that we really have the power, and then learn how to leverage that power. 

The services under the HR umbrella have a significant connection to the bottom line.  We touch people from their candidacy for employment, until well after they leave the organization.  Every aspect of an organization has a human component.  From interacting with staff to developing our managers to be leaders, our role is critical to organizational success. 

Providing HR leadership is essential to every part of the organization before, during and after employment.  Our involvement in other operational areas such as strategy, planning, quality, process improvement and shared governance/accountability further highlights our relevance.

Employee Satisfaction
Employee Engagement          
Diversity                                
Organizational Culture
Service Excellence            
Reward and Recognition       
Competency
Education/Training            
Leadership Development       
Succession Planning
Mentorship
Recruitment/Retention
Compensation
HR Metrics 
Employee/Labor Relations
Employee Councils     
Union Avoidance
Legal/Risk
Unemployment
Reduction in force
Closures/reassignments
Employee Benefits
Retirement/Pension

In the mean time, I challenge you to make the connection.
~ Joseph Conrod Sr. SPHR