Topic: BusinessDecision Making

Last updated: January 27, 2019

AbstractThe purpose of research project was to explore and understand the factors leading to the high rateof turnover for Meridian Behavioral Healthcare, Inc. An informal interview with the company’s Director of Hiring was conducted to gather data. We found that the turnover rate was 47%, which is within normal range for the industry; however the company would like to reduce this number because it is negatively impacting them.

In exploring the data, it appears that the departments with the highest turnover rates were the ones that have a high interaction between employees and clients. Secondary research shows that companies may experience many negative consequences due to a higher rate of turnover, and therefore, several factors that are known to increase these rates were identified. Recommendations to reduce this rate and improve employee morale were developed to combat these factors, and include use of written testing in the hiring process, increasing the line of communication between management and staff, increasing the effectiveness of training, and implementation of programs to increase employee morale.Meridian Behavioral Healthcare, Inc. is a private, non-profit organization that has a long history of providing community based and largely publicly funded behavioral healthcare services such as crisis stabilization, housing, counseling, case management, medication, substance abuse treatment, etc. The company promotes choice, hope, and recovery for those facing mental illnesses, addiction and other social challenges.

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According to the company’s website, services began in Alachua County in 1958 through a program in the Health Department that provided consultation to school nurses (Meridian Behavioral Healthcare, 2007-2010). The company continued to expand throughout the years, and as a result Meridian now offers a wide array of services and access to behavioral healthcare for the citizens of ten counties: Alachua, Bradford, Columbia, Dixie, Gilchrist, Hamilton, Lafayette, Levy, Suwannee and Union.Meridian covers a geographic area that is largely rural and sparsely populated. The area encompasses 6,711 square miles. As of 2003 the region had a population of 438,898, up 2% from 2002 (431,885), and 3% from the 2000 census figure of 428,885. Meridian maintains clinics in the nine (9) largest counties, with residential programs managed centrally in the two most populous counties, Alachua and Columbia (Meridian Behavioral Healthcare, Inc. 2007-2010).An informal interview was conducted with the company’s Director of Hiring to identify factors that could be negatively impacting the organization.

A review of data collected by Human Resources showed what appeared to be a high rate of employee turnover (defined by the company as employees that have resigned as well as employees that were terminated). According to a 2007 article by Henry Ongori:Employee turnover is the rotation of workers around the labour market; between firms, jobs and occupations; and between the states of employment and unemployment…MANAGING TURNOVER AT MERIDIAN 4The ratio of the number of organizational members who have left during the period being considered divided by the average number of people in that organization during the period..

. It is the entire process associated with filling a vacancy: each time a position is vacated, either voluntarily or involuntarily, a new employee must be hired and trained. This replacement cycle is known as turnover. This term is also often utilized in efforts to measure relationships of employees.

While meeting with the Director of Hiring, he reported that the company turnover is about 47% (Table 1 shows the turnover contribution by department), and stated that this is considered within the normal range of turnover for the mental health industry. This is consistent with the literature, which approximates the range ay about 25%–50% per year (Woltmann et. al, 2008).

The data being examined was gathered over several months beginning in July of 2009 (which is the start of the fiscal year). Although more recent data is not available at this time, there continues to be significant rates of turnover over the last few months. About half of the departments actually had more turnover than actual positions available (five to six of the 11 departments listed fall into this category- one is about even). Only one department during that time period, Program/ Business Development Administration, did not experience turnover. We found that the departments that show highest turnover, i.e. Support Services, Inpatient Services, Recovery and Community Reintegration, and Residential Services, are ones that have a high interaction between employees and clients.

There are several reasons people leave an organization (Table 2, Ben-Dror, 1994). Individual reasons such as job related stress, lack of commitment to the organization, job dissatisfaction, a sense of powerlessness, locus of control, personal control, and “role ambiguity” (Ongori, 2007). One study suggests employees leave for economic reasons, and that can assist in forecasting turnover rates (Ongori, 2007). Additionally, organizations that are smaller are usually less likely to offer opportunities to advance and competitive wages (Ongori, 2007).MANAGING TURNOVER AT MERIDIAN 6Uncertain expectations in any facet of the job (performance, job functions, roles within the organization, etc.) can lead to dissatisfaction, and sometimes, turnover (Ongori, 2007).One possible factor for turnover at Meridian could relate to the more recent addition of an electronic health record. Typically, these computer applications for managing mental health clients include scheduling, assessments, progress notes, electronic billing, etc.

, some of which were previously written by hand. Although it is not accounted for specifically within the turnover data provided by the company, it is possible that it was a contributing factor in some decisions to leave the company. “Personal reasons” appears as a reason for turnover in every department from summarized data, and these factors may fall under that category.List of Factors:1.

Bad relationship with my co-workers.2. Not feeling part of my team (part of my unit staff).3. Not enough responsibility and autonomy in my job.4. Too much responsibility and autonomy in my job.5.

Lack of effectiveness of treatment with my clients.6. Low salary.7. Lack of clear communication in my agency8. Lack of clear communication about my role9.

Lack of opportunities for me to participate in the decision making processes in my agency.10. Lack of my participation in decision making processes in regard to my clients. 11.

Lack of opportunity to move up in the hierarchy of my agency.12. Lack of a merit pay system (better work gets more pay).13. Bad relationship with my supervisor.14.

Lack of satisfaction from my direct service work.15. Lack of satisfaction with the physical conditions of my work place.16. Feeling on-going stress.17.

Not identifying with my organizational values and goals.18. Disagreeing with organizational policies in my agency.

Table 2: MOST IMPORTANT TURNOVER FACTORS. Ben-Dror, 1994There are many negative outcomes of turnover, some of which are mentioned in the article by Ongori:”… A high labor turnover may mean poor personnel policies, poor recruitment policies, poor supervisory practices, poor grievance procedures, or lack of motivation. All these factors contribute to high employee turnover in the sense that there is no proper management practices and policies on personnel matters hence employees are not recruited scientifically, promotions of employees are not based on spelled out policies, no grievance procedures in place and thus employees decides to quit.

“Woltmann (2008) notes that there can be economic costs for a company, such as a reduction in productivity, and an increase in financial concerns. The process of hiring replacement employees can be very time-consuming as it involves a “search of the external labor market for a possible substitute, selection between competing substitutes, induction of the chosen substitute,MANAGING TURNOVER AT MERIDIAN 8and formal and informal training of the substitute until he or she attains performance levels equivalent to the individual who quit…” (Ongori, 2007).According to Meridian’s HR department, recruiting and advertising to find new doctors is very expensive, and it costs a minimum of $2,500 (approximately) just to hire new employees.

Ongori notes that “nearly twenty years ago the direct and indirect cost of a single line employee quitting was between $ 1,400 and $4,000.” Some of these hiring costs include drug testing, advertising, and training. Ongori also says:Other costs, such as lost productivity, lost sales, and management’s time, estimate the turnover costs of an hourly employee to be $3,000 to $10,000 each. This clearly demonstrates that turnover affects the profitability of the organization and if it is not managed properly it would have the negative effect on the profit. Research estimates indicate that hiring and training a replacement worker for a lost employee costs approximately 50% of the worker’s annual salary In addition, each time an employee leaves the firm, we presume that productivity drops due to the learning curve involved in understanding the job and the organization.High turnover could also lead to the company’s inability to accomplish some specific goals that might increase profits for the company, as was discussed in the interview.

As Ongori writes, “all these affect the profitability of the organization.” Additionally, since empty positions are not incurring revenue, there can be an incredible opportunity cost, especially for clinical positions. Along these lines, there can also be an increased usage of overtime payments if there is not enough staff.MANAGING TURNOVER AT MERIDIAN 9Another cost could be a reduction in the quality of client care due to instability within clinical departments and disruptions in implementing services for clients can hinder the recovery process (Ongori, 2007; Woltmann, 2008).

According to Woltmann “very high turnover is almost always a hindrance to implementation of services” (2008). In fact, Woltmann’s study notes:A systematic examination of the qualitative data provides insights into the complexity of the relationship between turnover and implementation outcomes. Seventy-one percent (30 of 42 teams) of agency teams using evidence-based practices noted that turnover was a significant factor in implementing the evidence-based practices over the 24 months. Further, a pattern emerged when examining the actual turnover rates and the qualitative reporting of significance of turnover. No teams that experienced turnover under 33% (five teams) reported it to be a substantial factor in implementation. Teams experiencing turnover in the range of 33% to less than 100%, considered a medium range, were mixed in their experience of turnover as significant.

Seventy-four percent of these teams (14 of 19 teams) felt that it was a factor. Most teams with turnover rates over 100% noted that turnover was a substantial factor in implementation (89%, or 16 of 18 teams). These themes… illustrate the interplay between workforce issues and implementation of evidence-based practices.

Despite the increase in services for those with mental illness over the past few decades, high turnover has continued to be a major obstacle for the industry.Although Meridian’s rate of turnover is within the normal range for the industry (Woltmann 2008), it is recommended that one of the company’s goals be to reduce this rate, if not because of the negative outcomes of turnover, then because the Human ResourcesMANAGING TURNOVER AT MERIDIAN 10department has expressed a desire to use resources currently allocated for hiring to other tasks that could lead to some financial gains for the company.For many organizations, the hiring of an outside business consultant can often lead to valuable suggestions that have a strong positive impact on an organization. As a nonprofit, Meridian may not be in a position to hire such a person, or use financial incentives to increase employee satisfaction and therefore reduce turnover. However there are many other evidence- based practices that can lead to a reduction in turnover that cost very little, or nothing.First, there is a significant opportunity to improve the rate of turnover simply by improving the amount and/or quality of communication. According to Ongori’s article,”Employees have a strong need to be informed.

Organizations with strong communication systems enjoyed lower turnover of staff (2007).As with any job, it can be difficult to fit “extras” into the workday on top of other tasks, however, it is crucial to communicate positively with staff, even if it’s only to recognize that they are doing what they are being paid to do. In a high-stress environment, it can be difficult to complete what is necessary, let alone what is “above and beyond,” however taking time to address staff in a positive manner can help save time and money in the long-run.Another suggestion is to implement a committee consisting of both line staff as well as management, where employees can express themselves directly to management, and management can directly respond.

An increase in communication can not only increase understanding between these two groups, but also decrease rumors (Robbins, 2011, p. 61) and uncertainty in the workplace. Using the concepts of equity theory and organizational justice (Robbins, 2011, p. 255), people who are able to share their thoughts may feel an increased sense of organizational justice, and not base ideas and decisions on perceived inequities (Robbins,MANAGING TURNOVER AT MERIDIAN 112011, p. 257). As the textbook states: “Employees feel comfortable to stay longer, in positions where they are involved in some level of the decision-making process.”The company has already takes steps to increase employee morale, with ideas such as “Employee of the Quarter.” As burnout and stress are factors that have shown to increase turnover, it serves the company to encourage all program and department managers to make sure employees are “caught being good.

” As one study of 1,500 employees states, “the most powerful workplace motivator… is recognition, recognition, and more recognition” (Robbins, 2011, p. 295). In fact, these kind of intrinsic rewards have been shown to overcome turnover in jobs with a lower rate of pay (Robbins, 2011, p.

294). Currently, some departments are not nominating any employees for this recognition, and this is a simple change that could significantly improve morale.It is interesting to note that while speaking with Human Resources staff, there was mention of a recent, successful implementation of the goal-setting theory of motivation (Robbins, 2011, p. 248). The Crisis Stabilization Unit has been using a sort of “behavior chart” with stickers to recognize their staff.

While this may not be a typical method used to encourage employees, they have seen a significant improvement in morale and employee performance. Employees have apparently begun to “compete” over who gets the most stickers, which could be an indication that this idea may benefit other departments as well.One other possible option is a recognition system similar to that of another local health care facility, which would allow clients as well as other staff to fill out a brief form if they have had a particularly positive interaction with staff.

Staff could be given inexpensive pins for their badges to show each incidence of positive recognition, and this could serve to encourage employees to provide great customer service for clients, in addition to helpful communicationMANAGING TURNOVER AT MERIDIAN 12with other coworkers. In this suggestion, employees can visually demonstrate how they are performing, and can remind themselves to provide great service whenever they see their accoutrements.Another idea that was discussed during the HR interview was the current hiring process of Meridian. As the hiring process is considered by many to be the “most important HR decision you can make” (Robbins, 2011, p. 588), it is important to pay special attention to this process. Of course, applications are a hiring standard, and background checks are conducted for greater than 80% of employers (Robbins, 2011, p.

590), but within the past two decades, there has been a significant increase in written tests (Robbins, 2011, pp. 590-591). Personality tests, a form of written test, are considered a low-cost, easy-to-use method of measuring traits that are strong performance predictors (Robbins, 2011, p. 591), and as was discussed during the HR interview, this is something the company has recently begun to use in the hiring of managers, and could be interested in using across the board, especially as it is inexpensive.One suggestion that may increase the effectiveness of training is to “individualize” training to the employee’s learning style. Some people may learn best from reading a manual, some from shadowing others, and some from listening (Robbins, 2011, p. 597). According to the textbook, effectiveness of training has been shown to be highest with those that have personalities which reflect “an internal locus of control, high conscientiousness, high cognitive ability, and high self-efficacy.

..” (Robbins, 2011, p. 598).

Additionally, as 70% of total job training has been shown to be informal (Robbins, 2011, p. 596), it is important to not only have managers who are easily approachable, but also other staff who are welcoming and willing to assist newcomers.MANAGING TURNOVER AT MERIDIAN 13Based on information gathered about current company practices, as well as an examination of literature, it is recommended that Meridian implement some, if not all, of these ideas to assist in the reduction of turnover.


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