By Allan Schweyer for the Talent Management Academy
“The essence of strategy – whether military, diplomatic, business, sports [or] political – is to build a posture that is so strong (and potentially flexible) in selective ways that the organization can achieve its goals despite the unforeseeable ways external forces may actually interact when the time comes.” – James Bryan Quinn
It won’t surprise anyone that among the top ten occupations with the most job openings in the United States is registered nurse and among the ten fastest growing occupations are three in the healthcare sector (physical and occupational therapists and occupational therapist assistants). Nor will many be surprised that more than 55% of current healthcare managers and nurses will retire by 2020. The average age of a nurse has increased from 42.1 to 47.2 in the past decade while the average age of U.S. residents has risen almost as steeply. All evidence points to a crisis of greater demand for healthcare just as the healthcare workforce ages, retires and suffers from a chronic skills shortage.
What is alarming is the general lack of preparedness in the industry when it comes to strategic workforce planning – especially given what’s at stake. In 2009 and 2010, two independent studies confirmed that healthcare ─ despite its clear and present challenges ─ is among the least mature industries in terms of talent management. (Figures One and Two)
Figure One: Maturity in Defining and Implementing Talent Strategies
Figure Two: Implementation of Talent Management Practices
Coping Through Strategic Workforce Planning
Strategic Workforce Planning is a holistic framework within which to assess and analyze the impact of internal and external trends on the workforce. Strategic Workforce Planning considers the current state, and explores alternate futures. For healthcare, like other industries, workforce planning offers:
- A qualitative and quantitative model that includes both internal and external factors
- A systematic process methodology for analyzing complex issues that can impact the workforce of the future
- An ability to readily respond to change and adapt to meet new conditions
- The capability for decision makers to better recognize a scenario in its early stages, should it actually be one that unfolds — and be prepared for it
- A decision support methodology to make workforce decisions in keeping with the organization’s priorities, both for workforce growth and contraction
- A direct line of sight between the long term business strategy and the concomitant workforce required to execute that strategy
The basic and obvious need for workforce planning in healthcare derives from the statistics cited in the article’s opening paragraph. Put simply, hospitals, clinics and other healthcare organizations must know their skills complements today and what is required now and three to five years out. Then they must employ strategies to close the gap. Of course, the complexity is in the details. Ongoing retirement and turnover forecasting, demand forecasting, recruitment and retention strategies, scenario planning and a good deal of analysis, including much educated guesswork and a variety of talent management interventions are likely to be needed.
At a minimum, the workforce planning process should provide answers to the questions below:
- Which segments of our workforce and which jobs create the most value? Now? Five years from now?
- In what areas is the talent market heating up? Where are the most severe skills shortages likely to occur and for what talents will the greatest competition for workers likely be? How will we be impacted?
- Where will future demand be concentrated? Do we know what skills and competencies will be needed to meet this demand?
- Which areas of our hospital/clinic/practice will be most severely impacted by retirements?
- Are we successfully transferring and preserving knowledge?
- What are we doing to prepare successors?
- What skills will we need over the next 5 years that we don’t currently have? How will we get those skills?
- What is our attrition within critical areas? What is this costing us in terms of safety, productivity, quality, innovation and preparedness for the future?
Only a small minority of organizations in any industry can answer these types of questions with evidence to back up their assumptions. But if answers aren’t available, the organization is tremendously vulnerable and in the case of healthcare, so are the patients. In other words, there is unacceptable risk that comes with poor or non-existent workforce planning. That risk is more obvious when factors external to the hospital or clinic are considered (Table One).
Table One: Sample Internal and External Factors in Workforce Planning
Considering external factors, other important questions come to light, below are a few examples:
- If the age, ethnic makeup, workforce or other attributes of the population the hospital serves is changing, how might this impact demand in three years or five years?
- Do we know where critical workers such as nurses live in relation to the hospital/clinic/practice? Are there patterns? For example, do eighty-percent or more of a critical group live within ten miles of the hospital? If so, why and what are the implications?
- If a majority of the nursing population living within a ten-mile radius of a hospital is projected to retire in 5 years, but the average home price in the area has become too expensive for young and newly immigrated nurses, how will it be able to affordably attract new entrants to its workforce in this location?
- What if we experience a natural disaster in the middle of the night, and the majority of our physicians live on the other side of a major bridge affected by the disaster, how will we cope?
- If we determine that we need more physician and nurse specialists to expand into an area of forecast demand but the costs are extraordinarily high, how should we decide our course of action?
- What political, technological and global scenarios should we consider in our long-range planning?
Creative responses to each of these risks have been arrived at by many hospitals through strategic workforce planning. Indeed, a close cousin of workforce planning is risk management. The healthcare field is rife with human capital risk ─ from intense competition for key skills to unfavorable workforce demographics and a volatile political environment that can change the game at any time. For all of our sake, healthcare industry leaders cannot afford to ignore the perils that come with poor or non-existent planning.
Allan Schweyer is a labor economist and well-known author, researcher and writer. He has been recognized as among the 100 most influential people in HR and talent management. Allan is a Partner in the DC-based Center for Human Capital Innovation.