What are the costs of this turnover? Might there be any benefits?
Managerial Turnover: A Problem?
HealthCareLaunderCare (HCLC) is a company that specializes in picking up, cleaning, and delivering laundry for health care providers, especially hospitals, nursing homes, and assisted care facilities. Basically, these health care providers have outsourced their total laundry operations to HCLC. In this very competitive business, a typical contract between HCLC and a health care provider is only two years, and HCLC experiences a contract nonrenewal rate of 10%. Most nonrenewals occur because of dissatisfaction with service costs and especially quality (e.g., surgical garb that is not completely sterilized).
HCLC has 20 laundry facilities throughout the country, mostly in large metropolitan areas. Each laundry facility is headed by a site manager, and there are unit supervisors for the intake, washing, drying, inspection and repair, and delivery areas. An average of 100 nonexempt employees are employed at each site.
The operation of the facilities is technologically sophisticated and very health- and safety-sensitive. In the intake area, for example, employees wear protective clothing, gloves, and eyewear because of all the blood, tissue, and germs on laundry that comes in. The washing area is composed of huge washers in 35-foot stainless steel tunnels with screws that move the laundry through various wash cycles. Workers in this area are exposed to high temperatures and must be proficient in the operation of the computer control systems. Laundry is lifted out of the tunnels by robots and moved to the drying room area, where it is dried, ironed, and folded by machines tended by employees. In the inspection and repair area, quality inspection and assurance occurs. Laundry is inspected for germs and pinholes (pinholes in surgical garb could allow blood and fluids to come into contact with the surgeon), and employees complete repairs on torn clothing and sheets. In the delivery area, the laundry is hermetically sealed in packages and placed in delivery vans for transport.
HCLC’s vice president of operations, Tyrone Williams, manages the sites—and site and unit managers—with an iron fist. Williams monitors each site with weekly reports on a set of cost, quality, and safety indicators for each of the five areas. When he spots what he thinks are problems or undesirable trends, he has a conference call with both the site manager and the unit supervisor. In the decidedly one-way conversation, marching orders are delivered and are expected to be fulfilled. If a turnaround in the “numbers” does not show up in the next weekly report, Williams gives the manager and the supervisor one more week to improve. If sufficient improvement is not forthcoming, various punitive actions are taken, including base pay cuts, demotions, reassignments, and terminations. Williams feels such quick and harsh justice is necessary to keep HCLC competitive and to continually drive home to all employees the importance of working “by the numbers.” Fed up with this management system, many managers have opted to say “Bye-bye, numbers!” and leave HCLC.
Recently, the issue of site and unit manager retention came up on the radar screen of HCLC’s president, Roman Dublinski. Dublinski glanced at a payroll report showing that 30 of 120 site and unit managers had left HCLC in the past year, though no reasons for leaving were given. In addition, Dublinski received copies of a few angry resignation letters written to Williams. Having never confronted or thought about possible employee retention problems or how to deal with them, Dublinski calls to ask you (the corporate manager of staffing) to prepare a brief written analysis that will then be used as the basis for a meeting between the two of you and the vice president of HR, Debra Angle (Angle recommended this). Address the following questions in your report:
1. Is the loss of 30 managers out of 120 in one year cause for concern?
1. What additional data should be gathered to learn more about managerial turnover?
1. What are the costs of this turnover? Might there be any benefits?
1. Are there any lurking legal problems?
1. If retention is a serious problem for HCLC, what are the main ways we might address it?