There is no more important decision than who we let into our provider platform organizations. Yet, across the country provider platforms routinely overlook the cost of weak hiring programs. What is the true cost of hiring the wrong CEO, CFO, COO or head of payor contracting? What is the fully amortized impact to your profit of unusually high annual staff turnover?
Tangible costs, lost momentum, lost time and lost revenue associated with subpar hiring ultimately results in immeasurable cost to your physician platform. At SCALE, we don’t like ambiguity, for example the term “immeasurable”. It’s a dangerous term because in this example it describes an organizational cost that can then be all too easily dismissed.
Let’s first tackle this term “immeasurable” together.
Consider your staff turnover rate across all of your divisions. How many staff members does that rate represent each year? What does that cost in lost productivity?
For a very rough calculation, assume one month of departure notice and the same one month to find a replacement. Add another 3 months for the replacement hire to get fully trained and integrated. That’s 4 months of lost, or reduced, productivity for each FTE turnover. Now calculate that 4 months by the number of lost FTEs each year and their average salary.
Don’t forget to add in search-related costs – e.g., agency fees, advertising fees, background and credentialing checks, drug tests, and staff time required to handle resume screening and interviews.
And, that’s all assuming your team picked the right replacement hire. More realistically, assume that under pressure to replace the departing FTE as quickly as possible, there is a, say, 50% chance that the replacement hire underperforms over a materially longer period of time. Or, worse yet, that your new hire is actually just the beginning of your next replacement process.
Direct costs may also only touch the tip of the true cost iceberg. High staff turnover tends to be contagious. Staff instability within a department or organization generally breeds further turnover. Trying to stay above water while coping with chronic/high staff turnover results in:
Ultimately everyone in your organization matters – above and beyond a high turnover rate is the reality that even a single bad hire can impact an entire department or even the whole organization.
The below are a few of the lessons we have accumulated at SCALE for building successful hiring programs.
1. Identify the cost of losing a FTE
2. Set a goal
3. Develop a job specific business plan with the SCALE team
1. Develop a systematic process for evaluating candidates
2. Incorporate a technical expert interview
3. Prepare a candidate feedback survey
4. Accurately describe your organization, its culture and its goals
5. Work with the right search firm
1. Incorporate the aforementioned job specific business plan into the new hire’s integration program
2. Measure performance starting with the interview
3. Close the loop on hiring decisions
Reliance on search firms to find the perfect match for your organization when using only broad descriptions of the job opportunity is let’s face it alchemy, not science. No single search firm, no matter how expensive, is equipped to solve all of your hiring challenges.
Assuming that large volume staff hires that focus on lower paid candidates would not benefit from a more organized scientific approach to candidate selection and performance oversight is an assumption we similarly push back on.
At SCALE, we help our platform partners identify where the under-performance is taking place and the reasons for it, both of which are critical. Is there an individual who is underqualified, undertrained, undermanaged, or filling a role that doesn’t best suit them? What level of systemic risk/cost does this individual present? What remedial strategies are in place to elevate performance? Ultimately, every analysis should include a chronology of events that ultimately starts with the hiring process.
How many management and staff team members will your organization hire over the next 12 months? The next five years? Ultimately, every hire matters and a steep price is paid for weak hiring programs that perpetuate.
At SCALE, we help to orchestrate a hiring team including the search firm, platform management team, physician Board, and private equity team to identify the underlying problems associated with turnover, bring science to the interview process, and evaluate employee performance. We welcome the opportunity to work together to further build and perfect your end-to-end talent management methodology from C-suite to department management to staff-level hires.
We will also and as necessary introduce our pre-selected third-party search firm into the process who compliments our skills as an operator purely focused on better search execution.
We believe that between a dedicated search firm and SCALE’s focus on reducing turnover and increasing recruitment performance, your platform will experience the benefits of material improvements in hiring. Let’s get to work.
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