Mini Case: Colossal Health System-Memo for Details on Human Resource Department Spending

TO: Chief Operating Officer

FROM: Nancy Gonzalez, Vice President Human Resource

DATE: April 22, 2018

SUBJECT: Description of Human Resource Budget Spending of $1.53 Million

With the high demand for yielding cost-effective and high-quality service in the healthcare industry, it is imperative to look for and adopt the best practices in the most cost-effective manner. There has been the high turnover rate reported in the health industry over the past years. It is needed to reduce the turnover rate for reducing the unseen costs associated with the replacement of the leaving employees. The below chart shows the turnover costs regarding the replacement cost, separation costs and training costs;

These costs are based on the weighted average of the different positions like executives, physicians, other professionals, and non-professionals.  Whereas, the individual costs computed are way over then the weighted average.

The below bar chart shows the total cost incurred because of the turnover of employees. The turnover cost of all categories is the weighted average of all employee categories. The total turnover cost includes all the above-mentioned costs not including the cost of Productivity loss, whereas the total turnover cost including productivity loss includes the productivity loss as well.

The financial savings from the reduced turnover reported in the last three years without including the productivity loss is $ 350,780 and including the productivity loss is $592,354. The turnover rate has reduced by 21% on average in the last three years. The financial savings account for 38% of the financial spending of $ 1.53 Million. It seems a small percentage, however, given the amount of effort we have already put into increasing the efficiency of our staff by taking the following steps will provide exponential benefits in the following years;

• Development of system career ladders increasing employee retention
• In-house training management programs
• Developing of model staffing ratios to reduce burnout
• Absenteeism incentive programs
• Conducting of employee surveys and feedback programs to identify problem areas

These efforts are all taken for long-term benefits The implementation and continuity of the program will not only reduce the costs more in following years, but also increase high retention rates and consequently increase productivity.

Regards