Academic journal article Journal of Healthcare Management

Innovative Human Resource Practices in U.S. Hospitals: An Empirical Study

Academic journal article Journal of Healthcare Management

Innovative Human Resource Practices in U.S. Hospitals: An Empirical Study

Article excerpt

EXECUTIVE SUMMARY

Contemporary organizations increasingly recognize human resource (HR) capabilities as a source of sustained competitive advantage; about 80% of an organization's value is attributable to intangible assets, including human assets and capital. Some scholars consider effective human resource management (HRM) the single most important factor affecting organizational performance.

This study examined (1) the extent to which HRM strategies were included in organizational strategic planning and (2) the association between the involvement of senior HR professionals in strategic planning and the use of innovative HR practices in U.S. hospitals employing strategic HRM theory. A survey was administered to 168 chief executive officers and HR executives from 85 hospitals during spring 2005. Binary logistic regression was conducted to determine whether HRM involvement was associated with the use of innovative HRM strategies in the hospitals.

We found significant associations between HRM strategy inclusion in the strategic planning process and senior HR professionals' involvement in organizational strategic planning and in three innovative HR activities: finding talent in advance for key job openings (odds ratio [OR] = 4.61, 95% confidence interval [CI]: 1.10-7.38), stressing organizational culture and values in the selection process (OR = 3.97, 95% CI: 1.01-3.97), and basing individual or team compensation on goal-oriented results (OR = 6.17, 95% CI: 1.17-3.37).

Our data indicate that innovative HR practices were underused in some U.S. hospitals despite their potential to improve overall hospital performance. Hospitals that emphasized effective HRM were more likely to use some of the innovative HR approaches. In this article, we discuss this research and the practical implications of the findings.

INTRODUCTION

Contemporary organizations increasingly recognize human resource (HR) capabilities as a source of sustained competitive advantage (Hatch & Dyer, 2004; Van De Voorde, Paauwe, & Van Veldhoven, 2010; Wright, Cardner, Moynihan, & Allen, 2005) as they become more dependent on employees' expertise, abilities, and commitment (Towers Watson, 2008). According to one study, about 80% of an organization's value is attributable to intangible assets, including human assets and capital (Hogan et al., 2002). Effective human resource management (HRM) may be particularly important in knowledge-based organizations specializing in very complex or high-quality products and relying on highly qualified human resources to deliver them (Khatri, Baveja, Agrawal, & Brown, 2010; Shaw, 2004; Yang & Lin, 2009). Healthcare is an example of a knowledge-based industry in which value is created by intangible services delivered by highly trained professionals.

Some scholars consider HRM the single most important factor affecting performance in organizations and deem personnel issues to be as important as financial and operational issues (e.g., Khatri, 2006; Khatri, Brown & Hicks, 2009). The logic underlying this view is that effective HRM improves employee job satisfaction; increases individual productivity; reduces employee turnover; and decreases organizational costs associated with recruitment, hiring, training, and retention (Michie & West, 2004). Given that personnel compensation accounts for about 60-85% of the operating budget in a typical healthcare organization, effective personnel management may significantly affect the bottom line.

High turnover rates occur in the U.S. healthcare workforce (CareerPath .com, 2010; Workforce Management Magazine, 2011), accompanied by associated organizational costs. For instance, one study of a U.S. academic medical center reported that turnover rates in the facility were 3-6% of the annual operating budget, resulting in additional costs of $17-29 million to the organization (Waldman, Kelly, Arora, & Smith, 2004). A more recent study by Buchan (2010) estimated turnover costs for a facility employing 500 nurses: Assuming an annual turnover cost of $8,000 per nurse and 7% turnover, such an organization would incur $280,000 of extra cost. …

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