Problem: Based on anecdotal evidence provided by a couple of nurses in interviews with consultants, the nurses appears to be dissatisfied with their pay. Two nurses threatened to quit if management did not increase their pay to a level they feel matches their job responsibilities. You must analyze the data from a recent Job Satisfaction Survey conducted as part of a management effort to assess employees’ satisfaction with pay and other organizational factors. MMC has 474 employees in three job classes: administrative, nurses and nurse supervisors. All employees responded to the survey.
Information on the case was described by a previous consult and can be found at:
The survey used is one developed by Dr. Paul Spector. References and norms for the JSS (Job Satisfaction Survey) can be found at
Miracle Medical Center was established in the early 1900s in Baltimore City. For over three quarters of a century, it has developed a sterling reputation for providing health care to all city residents in need, both wealthy and poor. It has also established itself as a regional center for treating orthopedic problems and traumas caused by gunshot wounds. Patients who need orthopedic surgery are referred from all over the mid-Atlantic region. MMC offers a full range of medical services to the city and surrounding counties. It has drawn many of its excellent medical specialty personnel from Johns Hopkins U. and the
University of Maryland schools, both of which have strong national and international reputations. Up until the last decade, it has been able to maintain a strong medical support staff including nurses and medical technicians, many of whom have been with the institution for most of their careers.
Since the health care reform began to really take hold over the past ten years, MMC is beginning to experience competition from both smaller and larger hospitals that seem to be able to provide services for considerably lower costs. However, it has been only recently, with the decline of the Baltimore population, that MMC has had to focus on cost control to stay viable.
In an effort to address the change management issues such as increased competition, restructuring of the health industry and controls exerted by HMOs, MMC retained the help of Bean Counters Group, Inc., a big eight accounting firm, to assist them in instituting cost containment measures.
After downsizing as much of its nursing staff and service personnel that was deemed feasible, BCG informed MCC management that its costs were still significantly higher than its regional competitors'. It seems that the primary reason MMC is unable to develop a competitive cost structure is because the board of directors insists that the institution maintain a full range of services to accommodate the population of city residents they serve. Thus, the board's mandate results in creating a two-fold problem that impedes cost reduction measures available to most other hospitals. Many of the city residents are elderly, have access only to MMC, and are often on some sort of public assistance. Therefore, the third party reimbursement rates are often below what competitors are willing to accept. This of course, places a disproportionate share of the burden on MMC to provide indigent patients with medical care. Secondly, in order to maintain the range and level of services needed, MMC must continually invest large sums of money to buy state of the art equipment and keep it up to date. In 1993, BCG analyzed the organization and decided to reduce operating costs through downsizing and improving work performance. They began first by analyzing all jobs and eliminated any duplications of work. Where possible, existing personnel picked up the job tasks for those positions that were eliminated. At this point, there was anecdotal evidence of complaints from technical personnel who already felt stretched.
All nurses were asked to assume more responsibility and the floor nurses were re-organized altogether. BCG promoted this as cost saving measure as "job enrichment." By doing so, they were able to "flatten" the organization somewhat by eliminating several nurse supervisors. Unfortunately, those "downsized" were some of the most experienced and most liked by fellow employees. Many unit nurses were reassigned in order spread the staff to cover more units with fewer nurses. This tended to break up established social groups who had worked together for years.
Each nurse was given responsibility for a specific number of patients on the unit. With the exception of the Critical Care Unit, each department was set up using the same formula for assigning patients to nursing staff. Nurses on some units, however, felt
that they had a much heavier load than others whose patients generally needed less attention.
Under the "Save a buck" Continuous Quality Improvement (CQI) program BCG set up, the technical blood work lab was able to reduce the turnaround time for blood tests, and pick up the overflow of testing from a nearby smaller hospital. With this new
initiative, and by using overtime more efficiently, the lab was able to save $65 thousand over two years. As a result of their excellent program, they won the Miracle Money Manager Award (MMMA) for 1995. They were very proud of their accomplishment until their VP of operations told them that because they were so effective, they should be able to do even a better job in the coming year.
Each unit or department that was able to reduce quantifiable costs was rewarded by giving a bonus to all members of the group. Tom Gullikson, a unit supervisor in physical plant, however, informed the CQI counsel that several of his crew members were disgruntled since it was well known that only a couple of people in his group really did anything toward the cost savings.
Recently, although the cause is unclear, there has been an increase in turnover, especially for the technical positions. Rod Laver, a personnel generalist, who does recruitment and initial interviewing, noted that other hospitals are paying about two to four thousand dollars more for what he thinks are the same jobs.
Lindsey Davenport, the HR director, is concerned about what's happening and has brought the matter to the attention of the Quality Council. She also talked about it informally with the consultants with BCG. The chief consultant told her that this is to
be expected and that any morale problems will dissipate over time, and not to worry about it. He emphasized that she should simply try to motivate everyone to meet the projected savings that are targeted for each department. The Quality Counsel
members are more willing to listen. They have heard some of the grumbling, but say that at this point there is no clear evidence that it's really a problem.
The Chief Operations Officer, Richard Reneberg, has been hearing about all of this and has discussed the situation with Lindsey who has asked you, as personnel specialist, to figure out what should be done. She wants you to decide how to address the potential (or real) morale problem and then decide what action should be taken to resolve it. She asks that you come up with a couple of well thought-out recommendations to assess the situation. Although she feels that this is an urgent issue to address, wants you to take into consideration the time and costs that may be involved.