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Addressing the Healthcare Talent Shortage A Strategic Recruiting

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					W H I T E PA P E R

Addressing the Healthcare
Talent Shortage:
A Strategic Recruiting Imperative



April 8, 2008
Greg Barnes
Managing Director
Futurestep, a Korn/Ferry Company




STRATEGIC TALENT ACQUISITION
                                    ®
Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       Executive Summary                                          “generalist model” should focus on specific domain
       Healthcare providers are increasingly feeling the          expertise of recruiters/researchers, direct sourcing
       pressure to manage costs and provide new                   access to the passive candidate market, and
       treatments and better outcomes for patients. In an         competency-based candidate screening/assessment
       industry where success is increasingly driven by           methodologies.
       satisfaction scorecards, reliable access to key talent
       is essential for meeting the demand for quality            Confronting an Era of Change
       service. At the same time, the difficulty of ensuring      During the last decade, a critical worldwide shortage
       a reliable supply of clinical and professional talent is   of professional talent has emerged as a central
       challenging the status quo of traditional talent           issue in corporate workforce planning. Sustained
       acquisition strategies.                                    global business growth, changing demographics,
                                                                  and worldwide competition for talent have made it
       The industry talent shortage is perhaps the most
                                                                  far more difficult to achieve ideal staffing and
       important factor affecting organizational success—
                                                                  service levels. Nowhere is the problem more severe
       and it will remain a key challenge over the next two
                                                                  than in the healthcare environment, where talent
       decades. In addition, healthcare providers will face a
                                                                  shortages put lives at risk. Even as economic
       growing senior population that demands new and
                                                                  indicators point to potential weakness in the
       expanded services. Due to the talent shortage and
                                                                  economy, and the demand for labor may slacken in
       the growth of the senior population, the demand for
                                                                  some sectors, healthcare talent shortages will
       talent will stretch many organizations to their limit.
                                                                  continue to impact organizations. As the U.S.
       Healthcare providers that struggle to maintain the
                                                                  population ages, there is an increased demand for
       talent and staffing levels required to design,
                                                                  services. Today, recruiting and retaining qualified
       manage and deliver optimal service levels and
                                                                  executive leaders, middle managers and clinical
       health outcomes will likely suffer diminished
                                                                  professionals rank as top concerns for virtually all
       scorecard performance, declining payment rates,
                                                                  healthcare organizations.
       and erosion of already thin margins.
                                                                  These challenges aren’t likely to disappear anytime
       The good news is that with the right combination of
                                                                  soon. Advancements in medicine have radically
       creativity, flexibility, and passive candidate
                                                                  changed the business of healthcare. Technology has
       recruiting capability, organizations can take the
                                                                  added years to lifespans and enhanced the quality
       steps needed to address the healthcare talent
                                                                  of life. Yet, this progress has come at a steep cost.
       shortage. Specifically, overcoming the growing
                                                                  According to the Centers for Medicare & Medicaid
       talent gap requires a clear employment value
                                                                  Services (CMS), 16 percent of gross domestic
       proposition (EVP) and a strategic workforce planning
                                                                  spending in the U.S. ($1.86 trillion), more than the
       process that can drive recruitment organization
                                                                  entire Gross Domestic Product (GDP) of Canada, is
       design with scalable recruitment teams.
                                                                  now devoted to healthcare services and products.
       Configuring recruitment resources to update the




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Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       For seniors, 40 percent of their total consumption is      workers in the U.S. This is perhaps the most critical
       directed to healthcare spending. Within the next 10        talent pool for healthcare providers. Two additional
       years, overall healthcare spending as a percentage         factors will further add to staffing challenges. First,
       of GDP is likely to rise to 20 percent ($2.23 trillion).   a growing proportion of the workforce is reaching
                                                                  retirement age. Those who continue to work will
       This focus on the cost and cost-effectiveness of
                                                                  likely cut back on hours. Second, there is an
       healthcare will intensify in the months and years
                                                                  insufficient number of new graduates in the medical
       ahead. It will also elicit a great deal of attention
                                                                  field to meet demand.
       during the next presidential election cycle and over
       the course of the next administration. “Virtually all      These shortages will extend beyond doctors, nurses,
       the budget issues in Washington are tied up in             therapists, technicians and others on the front lines.
       healthcare in one way or another,” notes Mark              They will also encompass management,
       McClellan, former Administrator for the Centers for        administrative and technical expertise as well.
       Medicare and Medicaid Services at the U.S.                 Ultimately, this shortage of talent will force
       Department of Health and Human Services, and               organizations to rethink how they deliver services
       now a senior fellow at AEI-Brookings Institute, a          and how they operate. Although ongoing advances
       Washington, D.C. think tank.                               in information technology have contributed to
                                                                  greater efficiency and productivity—relieving at least
       “Instead of looking forward to what’s coming in the
                                                                  some of the pressures of this labor shortage—labor
       years ahead,” says McClellan, “the public is
                                                                  trends will eventually overwhelm productivity gains.
       frustrated, anxious and even angry because they’re
                                                                  At a certain point, shortages of practitioners and
       afraid that they’re not going to be able to afford
                                                                  allied health professionals may result in diminished
       new technologies and procedures.” As baby boomers
                                                                  treatment and service levels. Overloaded managers
       reach retirement age and begin to devour a greater
                                                                  who lack the time to think strategically will likely
       share of medical services, political and financial
                                                                  resort to uneven tactical responses that increase
       pressures will continue to mount.
                                                                  staff tension and reduce employee satisfaction. As
       Demographic trends will greatly shape the storyline        a result, key practitioners and business decision
       for the future. The 76 million baby boomers who will       makers will find themselves putting out a seemingly
       continue to retire over the next 10 years at a rate of     endless string of fires rather than adding value to
       64,000 per month will be replaced in the working           the business.
       world by a substantially smaller pool of some 51
                                                                  Some believe that overseas recruitment of
       million Gen Xers and a relatively small group from
                                                                  healthcare professionals is a key to overcoming the
       Gen Y (though the vast majority will not complete
                                                                  shortages we face. Yet, even if the U.S. government
       their education in time to make up the difference).
                                                                  relaxes immigration restrictions in the future, this is
       This generational population trough will further
                                                                  unlikely to serve as a panacea for the ongoing
       tighten today’s approximate 2 percent
                                                                  challenges of filling key positions with the right
       unemployment rate among college-educated




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Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       candidates. That’s because there’s also skyrocketing     of change, encourage leadership and innovation, and
       demand for skilled managers, physicians and other        embrace the opportunity to creatively reassess and
       medical professionals in other countries. Many           reconfigure recruitment resources, both inside and
       foreign nationals who once saw the U.S. as their         outside an organization.
       only option are now staying in their native countries,
                                                                Healthcare operators and human resources
       or returning to them after working for several years
                                                                professionals who are willing to consider non-
       in the U.S. or Europe. Many of these nations,
                                                                traditional methodologies and metrics-based
       including Eastern European countries, China India,
                                                                process management are positioned to reengineer
       Taiwan and Korea, have witnessed a surge in
                                                                talent acquisition to fit this difficult environment.
       incomes and an emerging middle class. As an
                                                                “Organizations that succeed over the long term are
       improved standard of living takes hold, these
                                                                those that don’t mind being held accountable for
       countries are becoming an attractive alternative for
                                                                delivering better care at a lower cost to each patient.
       key segments of the labor force, including doctors,
                                                                They are constantly looking for ways to get better,
       nurses, IT professionals, technicians and managers.
                                                                and they recognize that this takes real leadership,”
       Put all the pieces together and it is apparent that      McClellan explains.
       we are faced with critical talent acquisition
                                                                As a starting point for designing an effective strategy,
       challenges. Healthcare providers have little or no
                                                                it is important to recognize that conventional hiring
       margin for error—and they cannot adjust easily to
                                                                methods weren’t conceived to deal with the set of
       even the slightest level of inefficiency when
                                                                circumstances currently unfolding. Although job
       managing human resources and running the
                                                                boards, company Web sites, classified ads, job fairs,
       business. Within such a challenging framework, it’s
                                                                and other recruitment tools attract a large number of
       important to break free of conventional thinking
                                                                candidates, these individuals vary widely in terms of
       and ordinary business practices and embrace
                                                                qualifications. The sifting process can be a
       creativity, flexibility, and entirely new ways of
                                                                tremendous drain on productivity, both for hiring
       approaching human resources issues.
                                                                managers and human resources professionals with
                                                                responsibilities beyond recruiting. Matching
       Putting an Enhanced Recruitment                          organizational needs with genuinely qualified
       Strategy to Work                                         prospects—particularly at management and leadership
       Today’s recruiting best practices are no guarantee of    levels of the organization—is a daunting task. For one,
       success in the future. Healthcare organizations          the wrong match can cost tens of thousands of dollars
       must adopt a sense of urgency about today’s labor        in added training costs or rehiring expenses. For
       environment. They must look beyond conventional          another, unfilled positions can incur significant
       recruitment and retention policies and focus on the      contract labor premiums or opportunity costs,
       broader picture of leadership and change                 including missed revenue targets, lost market share,
       management. It’s vital to understand the dynamics        and an inability to fully implement new programs.




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Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       In order to cope with this changing employment          other networking sites. New resources such as
       market, an organization must encourage front-end        these are leading the continuing evolution of the
       investments that result in more reliable workforce      recruitment landscape.
       planning strategies. Aligning talent requirements
                                                               As labor markets tighten and the Recruitment
       with evolving operational goals allows an
                                                               Process Outsourcing (RPO) industry matures, the
       organization to build a more accountable
                                                               “buy versus build” question is becoming more
       recruitment structure. However, in addition to
                                                               common. Many organizations are turning to
       devising the right hiring strategy, factors such as
                                                               professional recruiters outside their company to
       candidate care, determining an optimal mix of pay
                                                               locate, attract, screen and present qualified
       and benefits, and developing a responsive
                                                               candidates to hiring managers. By establishing
       onboarding process are essential. They create an
                                                               clearly defined processes, service level agreements
       enhanced employment value proposition.
                                                               and key performance indicators, these firms gain a
       It’s not surprising that there is a high correlation    competitive advantage.
       between satisfied employees and satisfied patients.
                                                               While hiring remains a core function that cannot be
       The ability to meet and exceed performance
                                                               delegated, partnering with a professional
       objectives directly correlates with an organization’s
                                                               recruitment organization for talent identification,
       management structure and leadership capabilities.
                                                               screening and recommendation delivers dedicated,
       A well-run organization also is more likely to emerge
                                                               scalable and expert resources at the right time and
       as a preferred employer… and thus attract the best
                                                               in the right mix. When outside recruitment partners
       talent.
                                                               are capable of providing flexible and scalable
       Make no mistake, conventional tactical recruiting       recruitment resources, it is possible to achieve an
       methods must give way to a strategic approach that      ROI that is difficult to replicate in-house.
       relies on a dedicated and sustainable multi-channel
                                                               Integrated workforce planning processes that are tied
       sourcing practice. This offers the ability to react
                                                               to anticipated organizational needs are at the center
       quickly and decisively to changing conditions. Social
                                                               of strategic and cost-effective recruitment practices.
       networks, in their infancy two years ago, are today
                                                               Measuring improvements in productivity and
       on the leading edge of high-functioning recruitment
                                                               predictability of recruitment outcomes emphasizes a
       operations. Professional networking site, LinkedIn,
                                                               total ROI focus over line-item costs. Greater
       for example, boasts more than 14 million individual
                                                               productivity and predictability ultimately reduce
       records that give individuals a chance to create a
                                                               many of the soft costs of traditional staffing
       million-plus person network in what the company
                                                               operations, including unrealized or under-realized
       refers to as only “three degrees of separation.” This
                                                               revenue that results from chronic vacancies, recurring
       is just one of many resources that have appeared
                                                               contract labor premiums (present in most healthcare
       with a similar focus, including sites such as
                                                               personnel budgets today), and increased turnover
       Naymz.com, Spoke.com, Ladders.com, and several
                                                               rates resulting from inequities in compensation.




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Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       Market-leading organizations will soon frame success             advanced pharmacy systems, the demand for technical
       in terms of the competitive advantage they’re able to            and managerial skills grows. Strategic sourcing helps
       gain through talent recruitment and retention. They              healthcare providers move beyond conventional resumes,
       will be able to meet internal and external performance           job boards, Web sites, and other passive processes, and
       objectives through properly staffed teams with the               achieve a more dynamic and successful talent acquisition
       highest quality talent. Over the next decade,                    strategy.
       healthcare providers that neglect integrated workforce
       planning and ongoing process improvements will
                                                                        Embracing Innovation and Sound Practices
       almost certainly find themselves at a disadvantage.
                                                                        In order to emerge as a world-class healthcare
       Fundamental changes in the market for talent—                    employer, organizations must address a variety of
       including the advent of new recruiting resources,                recruitment, retention and human resources issues.
       more competition for talent, and increased pressure              Establishing competitive pay and benefits is
       to deliver strategic impact—are forcing many                     essential—including long-range incentives and
       organizations to construct more comprehensive                    retention bonuses, referral bonuses, college tuition
       talent acquisition strategies. Specialized recruiting            coverage, and various non-cash perks. Some
       networks, domain expert recruiters and RPO                       organizations are developing better mentoring,
       partnerships provide ongoing talent management                   team-building experiences, and incentive-based
       systems and improved candidate processing                        approaches to boost camaraderie and morale. Some
       practices. They also help organizations reduce the               are offering prizes to employees with the most
       time managers spend screening candidates. With                   referrals each month. Others may offer luncheons or
       an eye on ROI versus line-item costs, managers are               dinner gatherings on key employee anniversaries.
       more likely to produce desired results and returns,              Many organizations now make it a point to present
       both today and in the future. The healthcare                     referral bonuses and other rewards at events that
       organization that assembles the strongest                        are attended by other employees. In some cases,
       management team—including middle management                      departmental parties or themed events provide the
       and department directors—will likely emerge as an                backdrop for employee recognition. All of these
       employer of choice, with a workforce that is more                efforts point to a renewed emphasis on continual
       satisfied and better prepared for future challenges.             engagement with employees.

       Strategic recruiting and long-term candidate tracking            A focus on career development and advancement is
       systems can support numerous areas of expertise,                 also a key to success in attracting talent. Today,
       including allied health, clinical services, healthcare finance   many professionals—particularly younger employees
       and accounting, healthcare human resources, healthcare           who have grown up in an era of downsizings and
       information technology and physician search. As                  labor turmoil—are intently focused on improving
       organizations migrate to electronic medical records              their knowledge and skills through continuing
       (EMR), sophisticated finance and HR systems, and                 education and training. Most healthcare




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Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       organizations already offer in-service and tuition      approaches, it is possible to affect positive change.”
       reimbursement programs. However, few have               Finding that kind of talent will demand new and
       adopted mentoring programs and internal                 improved recruitment and retention strategies.
       leadership programs that provide the type of
       informal expertise and guidance that too often
                                                               Moving Forward: the Importance of a
       fall through the cracks.
                                                               Strategic Outlook
       Some organizations are also introducing more            Strategic recruitment is moving beyond increased
       accommodating work arrangements, including              advertising budgets and eye-catching Web sites. It’s
       job sharing, flextime, telecommuting and phased         essential to build a more dynamic, proactive and
       retirement. These programs are often appealing to       performance-oriented recruiting and retention
       younger workers, women with young children, and         strategy. Establishing a reputation as an “employer
       older workers who want to continue working. A           of choice” is important in any business setting, but
       few organizations have also turned to contract          it is especially crucial within the service-oriented
       employees for certain positions, though the             world of healthcare. Achieving and maintaining
       practice can lead to dissention and strife for          best-practice recruiting effectiveness is an ongoing
       those with lesser benefits and little institutional     process—and one that demands specific and
       buy-in.                                                 scalable activities designed to maximize results. In
                                                               the years ahead, sustainable recruitment solutions
       Above all else, there is a need for creative problem    will evolve into a major specialty requirement for
       solvers and innovative thinkers—particularly at the     human resources operations that are already
       middle management level of healthcare                   stretched to capacity.
       organizations. Moving forward, there’s a demand for
       well-functioning teams, mechanisms for delivering       The most innovative and reliable talent acquisition
       the right information about a patient to the point of   strategies for the future will focus less on the
       decision, and smooth hand-offs among physicians,        annual line-item cost of recruiting and retention,
       allied health professionals, technicians and others.    and more on understanding opportunity costs and
       As healthcare reform takes shape in the years ahead     the organization-wide return on investment (ROI).
       and Medicare undergoes changes, the healthcare          In fact, due to competition for the available talent
       system will have to find ways to further improve        pool, many organizations may need to allocate
       productivity and achieve maximum results with           greater absolute expenditures for strategic
       existing resources.                                     recruitment processes and talent pipeline
                                                               management systems just to maintain current
       As McClellan puts it: “Healthcare is the                staffing levels. By taking a longer-term view—
       quintessential dynamic industry. Things have            beyond just the current list of open requisitions—
       changed enormously, and they will continue to           healthcare organizations are more likely to see
       change in the years ahead. But with effective           improved results and improved ROI.
       leadership and careful attention to proven




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Addressing the Healthcare Talent Shortage:
A Strategic Recruiting Imperative
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       Today’s talent shortage isn’t likely to disappear        About Futurestep
       anytime soon. Competing for a limited share of the       Futurestep, a Korn/Ferry Company, is the industry
       labor pool—particularly the most talented                leader in strategic talent acquisition, offering fully
       individuals—requires a well-designed human               customized, flexible solutions to help organizations
       resources initiative, effective recruiting and           meet specific workforce needs. Our full-spectrum
       retention programs, and a sound candidate and            portfolio of services includes: Strategic Recruitment
       development tracking strategy. While hiring should       Process Outsourcing (RPO), Project-Based
       remain an organization’s core competency,                Recruitment, Mid-Level Recruitment, Interim
       recruiting and the variety of processes that surround    Professionals and Consulting Services. With
       it are often best left to a trusted strategic advisor.   locations on four continents and a record of success
       The return on investment for recruitment process         in securing top talent around the world, Futurestep
       outsourcing and other recruiting, retention and          provides the experience and global reach to identify,
       human resources initiatives can be significant.          attract and retain the people who drive business
       In the end, moving from a tactical mindset to a          success. To learn more, visit futurestep.com or
       strategic outlook can determine whether an               call 866-776-4671.
       organization establishes itself as a best-practice
       leader and employer of choice, or a declining
       healthcare provider fighting to survive. Amid a
       growing concern and focus on high-quality
       healthcare services, visionary executives are doing
       everything in their power to build a strong
       organization that is well regarded by patients,
       employees and the community. They understand
       that leadership in the face of adversity, courage to
       change the status quo, and ROI-based decision-
       making will ultimately determine their ability to
       maintain organizational performance and success in
       a demanding healthcare industry.




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