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.

Staff Turnover Direct Costs

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.

Indirect Costs

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:

• Organizational distraction and lost momentum
• Reduced patient, employee and physician satisfaction
• Lost revenue and weaker overall performance results
• Other unanticipated tangible “clean-up” costs, for example, other divisions might be ignored as the organization is distracted by one particular department (putting out fires)
• Difficulty attracting future talent that catches wind of internal dysfunction

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.

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!!!

Transitioning From Compounding Cost to Compounding Value

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 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.

The below are a few of the lessons we have accumulated at Scale for building successful hiring programs.

I. Take a Hard Look at Your Organization

• Identify the cost of losing a FTE. Consider the above turnover cost calculations – what do the results suggest is the size of the issue within your organization?
  • What should your normalized annual turnover be and how are your departments fairing?
  • Highlight the departments that are underperforming and commit to tangible steps aimed at meaningful improvement.

• Set a goal. No department should experience more than X% turnover in any given year regardless of average pay and industry standards.
  • Then highlight the departments that are underperforming and commit to tangible steps aimed at meaningful improvement.

• Develop a job specific business plan with the Scale team. We start off every engagement by developing a clear, detailed roadmap and recommend the same approach for your hiring process.
  • Bringing clarity and analysis to the hiring selection process can help avoid hiring the right person for the wrong role.  Too often, organizations rely on broad and ambiguous titles to infer a match. It takes a vastly different skillset to support a stable operation vs. a turnaround vs. a growing operation.
  • From the outset, we will work with you to create detailed slides with a clear job description for each contemplated hire, integrating budgets and broader department goals and objectives, and answering what precisely will the candidate be asked to do? What tangible outcomes would define success for the prospective candidate?

II. Bring Science to Your Selection Process

• Develop a systematic process for evaluating candidates. Determine the most important questions for the candidate to answer. Where can you interject these questions into your slides?  How can the candidate fill in the blanks to demonstrate their expertise and cultural fit?
  • How many times has the candidate performed similar functions before?
  • Is the candidate able to articulate additional value add ideas to the plan?
  • Are they excited by the business plan?

• Incorporate a technical expert interview. Add a proven expert in the specific domain to your interview process for a technical peer-to-peer assessment. See Scale’s robust team of advisors.

• Prepare a candidate feedback survey. What is the candidate’s feedback, both good and bad, on what was presented to them?  Find out what the candidate would like the job to have more or less of.  Many of us have so many opinions, we just need to be asked.

• Accurately describe your organization, its culture and its goals. Now that you are engaged in a truly interactive dialogue with your candidates, you’re ready to match skill with personality and current circumstance.  Get clear on your message.  What makes your company a great place to work?  What does your company stand for?  What is your company’s current state and desired future state, and what is the candidate’s intended role in bridging the gap between the two within their department?

• Work with the right search firm. Once you’ve clearly identified the job specific business plan, how the candidate will be evaluated, and a clear communication plan, consider bringing in a high-impact search firm. When it comes to selecting the right search firm, ensure they are:
  • Experts in your space
  • Follow a rigorous methodology
  • Correctly incentivized
  • Client-focused, trusted advisors

III. Track the Progress of Your Employees and Hiring Teams

• Incorporate the aforementioned job specific business plan into the new hire’s integration program. Consider how to use the initial hiring materials to evaluate performance over time.  Can they act as an anchor around which the original selection can be evaluated?

• Measure performance starting with the interview. Keep track of every hire and score how good the selection was. What scored highly and why?  What scored poorly? What would you change in the selection process for next time and why?  Most importantly, who in your organization is committed to managing this endeavor?

• Close the loop on hiring decisions. Who is responsible for hiring?  Are they the same team responsible for assessing ongoing performance and reporting back on the ultimate results of their selections?  The disconnect between those who hire and those who manage needs to be bridged or nobody takes responsibility.

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.

We at Scale 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.