Downsized, reorganized: Should you pay cross-trained employees more?
Downsized, reorganized: Should you pay cross-trained employees more?
Tips on how to pay your field nurse/case manager/team supervisor
As many hospital-based home health care companies downsize and reorganize to increase efficiency and cut costs, home care executives find themselves stumbling over the question of how much the new, combined jobs are worth.
For example, a New Jersey hospital-based home care company needs to hire a marketer to keep up the pressure on its competition. The company doesn't have the money or the workload to hire a full-time marketing person, so the director is considering giving the job to one of her field nurses.
"If a field nurse makes fewer visits to do the marketing job part time, should she get paid more than before because she's doing two jobs? Or should she be paid less than before, because the marketing job requires less education and has no clinical responsibilities?" asks Toni McClay, BSN, the administrator of Memorial Hospital of Salem County Home Health and Hospice in Pennsville, NJ.
This dilemma can appear at all levels within a company. A national health care company might reorganize its various providers in one California market into an integrated health care system. What should the pay scale for the CEO of the new integrated system be? She used to be the CEO of a stand-alone hospital, but her salary for that job doesn't compensate her for her new responsibilities, which include high-level management, such as striking deals with managed care companies and forming networks.
Should an employee be paid more than the boss?
To ensure fair compensation, the CEO would have to be paid more than the top executives of the entire national health care company because her job is now much more complex then those of the executives to whom she reports. Should the company try to override the traditional rule that an employee be paid less than his or her boss? Because the CEO is more of a salesperson now, should her salary be tied to a bonus structure?
Still another common example occurs when hospital-based home care companies cut costs by reducing their administrative support staff. If one of two secretaries in an office is reassigned, the company must decide whether to pay the remaining secretary more because she is now required to work more efficiently, or whether to delegate some of her duties to someone else to help her do what used to be two jobs.
Old model for job valuation no longer works
"Most health care organizations are downsizing and becoming crossfunctional, so we're seeing a lot of new combination jobs. For example, there are a lot of home care nurses being asked to be case managers now," says Craig D. Nelson, BS, EMT, MPA, the regional director of health care consulting for Dallas-based HayGroup, a management consulting firm.
The problem with these new combination jobs is that it's hard to set a value and pay range for them because there aren't many similar positions to compare them against.
"There are no pat answers. There's not much data to tell you what these new jobs are worth in the marketplace," Nelson says.
To help readers handle these dilemmas, Hospital Home Health asked home care executives who have recently reorganized their companies how they approached this issue. Their strategies include the following:
* Develop new ways to assign job values.
To determine the value of these new combination jobs, home care managers must employ the same modern and creative thought process they used to create the new position, hospital-based home care managers tell HHH.
The traditional way of determining the internal value of a job is to take the job apart based on the knowledge, problem-solving ability, and degree of skill required to perform the job. This internal job value is then linked to the market in which the company is located and to the cost of living there, to set a pay range for the education and experience required for the job.
This model is lacking because managed care has increased the competition in the hospital-based home care market so much, it is no longer feasible simply to reward employees for their education and the number of years they have worked.
"Today, people with higher pay have diverse skills, are very productive, and wear lots of hats," Nelson says.
This old model of job valuation needs new and more criteria on which to judge a job's value. Here are some of the questions hospital-based home care companies have asked when assigning values to new positions created through reorganization:
-- Does the new job require the person to help implement new systems?
-- Are the skills needed to do the new job of a higher level than those that were required before the reorganization?
-- Does the job involve complex activities such as developing policies and implementing them, or simple activities such as checking to see that patient records are complete?
-- Does the job involve managing at the corporate level, or at the branch level?
-- Has the scope of the job widened?
-- How much decision making does the new position require?
-- What impact would an error made by the employee in the new position have on the company?
-- How much does the person in the position depend on his supervisor for direction?
-- Is the new job a corporate-level position, and if so, is the employee expected to act as a spokesperson for the corporation at the branch level through management style?
What is 'too much' work?
* View new combination jobs as single job positions -- not three jobs rolled into one.
Don't look at each position that was combined into the new job separately, says Bob Martin, a human resources manager at BJC Home Care Services in St. Louis. Otherwise, you'll get trapped by thinking your employees are doing more than they should.
Instead, break down the job requirements, recommends Les Siter, RN, MEd, MBA, who is CEO of Harris Home Health in Forth Worth, TX. This means sorting out the different tasks, duties, and responsibilities of the job titles at your company so you can more easily compare them to each other. For example, a position may require the employee to bring in new managed care contracts, serve as a point person for existing contracts, and write and implement a marketing plan.
* Don't assume a combination job requires a pay raise.
Restructured and combined jobs don't mean automatic pay raises, says Faye Royale-Larkins, RN, MPH, the director of BJC Home Care Services. "The importance of the responsibilities of the new job has to increase for the pay scale to increase," she says.
Also, though home care employees are often asked to do more work as a result of a reorganization, they may not get paid more for doing it. This is the reality of the drastic changes that the home care industry is going through now, executives say.
For example, if you combine two jobs of equal value, the employee who will fill this new position may only be asked to work more efficiently, and not at a higher intellectual level.
"Is the value of, say, a secretarial job increased by having the employee work more efficiently? I don't think so. It depends on the job requirements and abilities. The new job could have more, equal, or less value. You can't assume it will have greater value simply because it's been combined with another job," says Sarah Malone, director of human resources for Advocate Home Health Services in Oakbrook, IL.
At Community Medical Center Home Health and Hospice in Toms River, NJ, some jobs actually pay less now than they did before the company reorganized, says Werkman. Some secretaries and receptionists earn $1 less per hour than they did before, and there are fewer of these positions in the company, she says. While the company's business has increased by 40% in the last three years, she has cut three data entry positions, for example.
"Some people's salaries went up; some went down. Lots of folks' jobs were downgraded," Werkman says.
This is the reality of home care now, home care executives tell HHH. It's a shock, but making the change from a cost-based Medicare market to a competitive market means that concepts of acceptable salaries and levels of productivity must all be called into question.
If you are going to raise the salaries for new, combined and crossfunctional positions, these pay hikes need to go up in a rational fashion, Nelson says. A person with a new combination job is unproven, so you can't give a raise for work done well, he cautions.
"You have to ask yourself whether the job is bigger, or if it's just restructured," Nelson says.
If indeed the new position you've created requires an employee to work and manage at a higher level than before, then you have to pay them at that level, says Elissa A. Hamilton, BSN, MBA, the regional director of patient care for Nations Healthcare, a national health care system based in San Diego. If the person is untested at that level, then start them out at the bottom of that pay level, she says.
* If possible, compare those tasks and responsibilities of the new position to other jobs in your company.
BJC Home Care Services is part of the Voluntary Hospitals Association, based in Minneapolis, a health care system with numerous hospitals and home care companies -- and a central human resources department -- so Royale-Larkins was able to look at positions and salaries at many other organizations.
You may have access to similar information if your company is part of a larger system. If not, ask your friends and colleagues in the industry to compare their jobs with those of your employees.
Some companies use compensation package systems sold by management consulting firms to help them set pay scales for their employees. Advocate Home Health Services uses HayGroup's "Compensation Information Center" system to establish pay scales.
HayGroup's 50-year-old Compensation Information Center uses a statistical model to evaluate the know-how and accountability a job requires to help companies set pay scales for jobs in their market. Because the company has been providing this service to many companies in many industries across the country for so long, HayGroup has a vast database of job valuation information against which to compare its current clients' jobs. (You can call Nelson for information about this system. See source box for his contact.)
Though these types of systems can be expensive -- full-service job valuation and consulting services for an average-size health care company can cost $20,000 to $100,000 -- users say they work. Advocate Home Health Services is quite satisfied with HayGroup's objective approach to job valuation, Malone says.
Follow market trends
If you can't afford these services, then take the advice Nelson gave HHH: Follow market trends closely.
"People who don't use the HayGroup's system do well when they follow market trends well. The numbers came out the same when I've tried doing this with our statistical model, and then compared the outcome by doing a more subjective but rigorous comparison," says HayGroup's Nelson.
* Consider the extent to which managed care has penetrated your market.
Managed care also has brought big changes in the way job values are determined. Managed care has allowed insurance companies to transfer risk to providers, forcing providers to network and affiliate. Home care executives then have to manage at a higher level, becoming deal makers, out looking for managed care contracts and ways to leverage their position in the market.
"We used to look at the cost of living in a market to assign a value to a job. Now we have to assess the level of managed care and capitated contracts in a market to help assess job value," Nelson says.
To evaluate how managed care affects a job at your company, look at the job duties and the marketplace, Royale-Larkins says. Ask yourself: Does the employee have to worry about losing managed care contracts to competitors or about reducing the number of visits per diagnosis to remain attractive to managed care organizations? What percentage of your business is managed care?
For example, at BJC, a rural supervisor's pay is less than an urban supervisor's, because the challenges in these two different types of markets are different, and because the cost of living in the two markets is different. Also, BJC's market has a lot of managed care and stiff competition that employees must deal with, but the company is in the Midwest, so the cost of living isn't as high as it is in other areas that might not have as much competition or managed care.
"You have to attempt to be attuned to the marketplace where you are. What is normal in one market may be totally abnormal in another," Royale-Larkins says.
* Though experience isn't reimbursed as in the past, you can't ignore it.
Hospital-based home care companies cannot afford to reward employees for experience as well as they did in the past, but managers shouldn't cut experience out of the equation altogether.
"You need to recognize experience," Siter says. If you don't, you'll sacrifice employees' satisfaction with their jobs, he says.
* Assign new positions to job grades.
Once you have analyzed the new jobs created by your reorganization, you have to fit these new positions into your job grades. A certain amount of this decision is arbitrary. For example, Toms River, NJ-based Community Medical Center Home Health and Hospice needed to decide which job grades its new managerial and coordinator positions would be in. After looking at the number of employees that people in these two positions were likely to oversee, the decision was made that to be a manager a person had to oversee 15 or more people, Werkman explains. If a person supervises fewer than 15 people, the job is considered a coordinator position.
"You have to set your cutoff point someplace. You just have to decide where it's going to be. If it doesn't work, you change it," Werkman says.
Keep your balance
As the evolving home care market changes the way jobs are valued, there is a balance that must be maintained: how to be fair to both the company and the employee, home care managers say. The bottom line, though, might be that you have to explain to your employees that they'll simply have to work harder for the same pay.
"In the era of downsizing, you may have to wear three or four hats, and that compensation for doing extra jobs is not a given," Siter says. *
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