Evidence-Based Human Capital Management – Lessons We Can Learn from Healthcare
Roughly 60 percent of hospitals’ budgets are allocated to human capital, underscoring the need for good "people stewardship.” People stewardship refers to playing to an organization’s strengths in human capital planning to best control costs and invest most intelligently. HR executives need to encourage all leaders to establish the goals and standards for great performers.

Finance leaders are well positioned to help lead people stewardship by leveraging their related knowledge and experiences. They are accustomed to looking for the Return on Investment and holding others accountable. Effective, evidence-based leaders recognize that the financial impact of mismanaging their organization’s labor pool can be significant, so they respond accordingly. Some examples of the criteria they use to guide their actions include the following:

• It always costs less to develop and retain the right people.
• The direct and indirect costs of hiring the wrong leader for an organization are at least 6 to 10 times that person’s annual earnings (Proven Strategies for Successful Implementation of Best Practices Among Healthcare Presidents/CEOs, The Synergy Organization, 2003).
• Industry demographics reflect an increasingly limited pool of qualified candidates for leadership positions, further reinforcing the need for organizations to choose the right leaders initially and to retain their talent.
  

In evaluating an organization''s workforce hiring and promotion patterns, finance executives should consider several questions.

• Does the organization have an appropriate mix of internal promotions and external hires? Ideally, the percentage of internal promotions should be greater than the percentage of new hires to fill leadership positions. New hires could average 70 to 80 percent of an organization’s internal promotions. The key thing to keep in mind with all hiring decisions is, "Is this the right person for the right job at the right time?"
• How well does the organization track its average length of service? The longer an organization’s average length of service, the harder it will be for outsiders to penetrate the organization. It’s often helpful to track the average length of service by department, because the outliers can supply invaluable clues about what’s going on in the organization in regard to retention patterns.
• What is the organization’s tolerance for risk? In general, the larger an organization is, the greater the opportunities should be to grow talent from within the organization. It’s essential that organizations build in diverse growth experiences for their rising leaders as these leaders progress through the ranks.
• How well do we delegate? The highest-performing solo contributors often become poor leaders because it''s difficult for them to let go of what they were trained to do and what they do well. In contrast, good leaders have learned how to assign work to others, motivate and coach them, and measure their performance instead of putting out fires and handling the tasks themselves.
• Establish objective performance expectations for each position. Organizations should have precise ideas about the activities and competencies required for each job…not only for today, but also for the future-and the types of people needed to fill each position.
• A robust performance appraisal system will promote the following:
  
• A framework for identifying and developing leadership talent – at all levels – on whom the organization can rely to execute future strategies
  
• The creation of a leadership pipeline that will become the basis of a strong succession plan
  
• Individualized developmental plans that should encourage leaders to broaden their scope of knowledge and experiences beyond their immediate areas.
  
• A fluid succession-planning process that should accommodate the fluid and variable business needs of the organization over time.

Seven Strategies for Leveraging Talent

To more effectively and efficiently leverage their workforce talent, leaders should use the following seven strategies.

• Commit to creating and implementing a formal program by identifying key positions.
• Incorporate values in the appraisals of staff work requirements and competencies. Without these, individuals may be equipped with sound competencies, but may lack the ethical dimension that is so important to leadership in the future.
• Appraise individual performance, conducted against meaningful and generic job descriptions that focus on developmental strategies.
• Link performance to the organization''s strategic plan with near-, medium-, and long-term milestones and to the organization''s operating plan target, including specific financial targets, to help in predicting which employees are or will be best suited to satisfy the business needs of the organization.
• Assess future individual potential. By using an effective talent depth analysis leaders can determine whether an organization – healthcare-focused or not – has enough high-potential people to fill key positions.
• Close the developmental gap. Training helps employees meet their current job responsibilities; employee education prepares them to advance to future responsibilities, while employee development can be a tool for individual enlightenment or organizational learning.
• Focus the evaluation of succession planning and management on the most meaningful criteria, such as customer satisfaction, program progress, effective placements, and organizational results.
  

In summary, evidence-based human capital planning requires that successful external candidates are stronger than internal talent. These proven practices save money, while increasing teamwork, stimulating individual excellence, and promoting accountability. Nicholle Bilodeau, MBA, is the Senior Recruiter with The Synergy Organization, the country’s first Evidence-Based Executive Search and Assessment firm.
She can be reached at nicholle@synergyorg.com.