Employee Layoffs at St. Mary’s

HospitalHalil Yildirim

Management and Organization20.11.2014.

Introduction of the case

St. Mary’s Hospital Founded by Sisters of the Sacred Heart in 1908- Catholic Sisters Third largest hospital in the city Growing tendency No employee layoff before Sister Mary Josephine – CEO Ms. Sharon Osgood – Director of Personnel

The crisis point

1990 – 2002: increasing trend(76% -> 82% occupancy rate) 2002 - … : decreasing trend(52% occupancy rate) $3,865,000 deficit - Board of Director’s most recent meeting Key issue: short-term savings for covering 3 million $ Recommendation by Mary Josephine: employee layoff up to 10% Introduce a FAIR layoff policy (guarantee of reemployment)

Goals & Concerns

Short-term plan: save $3 million over the next year through employee layoffs

Long-term plan: avoid layoffs in the future Layoffs costly procedure, lost efficiency, potential lawsuits, lower

morale „The criteria for the layoffs not only be equitable, but also appear to be

equitable to the employees” Fair layoff process (alternative plans and new employment) WHO WOULD BE LAID OFF ??? Inadequate performance appraisal system needs innovation Traditional checklist rating scale with a summary rating

Exhibit 2.1 Percentage Distribution of Performance Appraisal Summary Ratings by Department at St. Mary’s Hospital

Department

Unsatisfactory: Needs to improve

substantially

Questionable: Needs some improvement

Satisfactory: Meets normal expectations

Outstanding: Substantially

exceeds normsNursing 6.4 6.4 54.2 33.0Allied Health 5.7 6.2 47.8 40.3Central Administration

2.7 3.1 67.5 26.7Dietetics-Nutrition

2.1 6.2 68.3 23.4Housekeeping-Maintenance

7.8 12.4 54.6 25.2Medical Staff 1.1 6.2 63.8 28.9

Exhibit 2.2 The Distribution of Employment and Payroll Expenditures at St. Mary’s Hospital

Department Number of Employees Annual Payroll ($) Annual Turnover Rates (%)Nursing 602 $15,050,000 12.1Allied Health 261 5,742,000 8.7Central Administration 154 6,160,000 3.5Dietetics-Nutrition 65 1,430,000 7.3Housekeeping-Maintenance

36 540,000 8.4Medical Staff 32 1,680,000 2.1TOTAL 1,150 $30,602,000 9.5*

• “satisfactory” or “outstanding” (worked for the hospital approx. seven years)

• “unsatisfactory” or “questionable” (less than three years of seniority)

Questions

Q1: Identify the most important organizational problems and root causes.

Q2: Identify the alternative possible solutions for St. Mary’s Hospital. Q3: Develop a detailed plan for the organization to save the 3M $ for

next year. Q4: Deliver your intended communication at an all employee meeting

of St Mary’s.

Q1

Q2

Q3

Q4

THANK YOU FOR THE ATTENTION!