Aside from the immediate issues, it seems that St.

Mary’s Hospital has lacked strategic

planning and HR planning in previous years to address the declining occupancy rates
and
potential financial deficit. Had there been a plan in place for if and when the hospital ran
Aside from the immediate issues, it seems that St. Mary’s Hospital has lacked strategic
planning and HR planning in previous years to address the declining occupancy rates
and
potential financial deficit. Had there been a plan in place for if and when the hospital ran
A CASE STUDY OF EMPLOYEE LAYOFFS AT ST. MARY HOSPITAL
1. Identification of problem:
St. Mary’s Hospital is struggling with its financial performance to maintain
business operations. The decrease in occupancy rate results in the projected deficit of $
3,865,000.00 for the next few years. With this, employee layoffs up to 10% focusing on
the non-essential groups were suggested to save the hospital’s financial position.
However, the enforcement of employees' lay off is one of the problems due to
inadequate criteria of the hospital’s performance appraisal system.
2. Identify the root cause of the problem:
The institution’s current issues arise due to lack of strategic decisions and HR
planning to overcome the declining occupancy rates and possible income loss. The
case study illustrates the existing performance appraisal system is ineffective because
of the traditional checking rating scale. Thus, management decisions and HR
confidence in executing employee layoffs became a challenge aligned with no union
constraints in the past (Nkomo, Fottler, and McAfee, 2011). Therefore, using the
seniority and merit for laying off employees would be inaccurate and might damage the
reputation and trust of stakeholders in the long run. The management failed to forecast
the hospital’s human capital to accommodate the business needs.
3. Alternative Solutions:
The following are the alternative courses of action for employee layoffs at St. Mary’s
Hospital:
a. Hiring Freeze for non-essential positions, Reducing of overtime and other
incentives/ bonus programs
This short-term alternative will be helpful to realize the target savings of $3
million and lessen payroll expenditures. Exhibit 2.2 shows that the Nursing department
has the highest allocation for payroll correlated to employees’ turnover rate. Due to the
department's attrition rate, St. Mary’s can integrate the hiring freeze and allow them to
accept internships for nursing students in various universities. These trainees can assist
the nurses in the hospital and can be assigned in different wards to gain knowledge and
expertise while reducing costs of overtime and any unnecessary salary expenses. On
the other hand, the hospital can benefit from the internship program until the finances
are under control. This approach will enable the institution to retain employees and
reduce the operational costs.
b. Voluntary resignation and natural attrition
Implementing voluntary resignation and early retirement is one of the alternatives
that St. Mary’s Hospital might consider. This should be enforced strategically allowing a
gradual manpower reduction without resorting to layoffs. Incentivization, early retirement
packages, and/or voluntary separation programs must be done effectively and
efficiently. Additionally, the institution can create a legal contract that allows employees
to be rehired once they experienced a surplus in financial performance.
c. Invest and establish mobile clinic
A long-term alternative should also be considered to sustain the hospital’s
financial position. The hospital can seek partnership with private institutions and other
investors to materialize the mobile clinic. Nkomo, 2011 stated that decrease in
occupancy rates grew due to different external factors including competition and
emphasis on outpatient services. Mobilized clinics can be implemented to bring
convenience to the patients specifically to the far-flung areas of the local community.
Revenue resources will be utilized in this strategy during the period of low occupancy
rate. St. Mary’s Hospital can increase its revenues by specializing in high demand
services such as heart transplant and dialysis (Wellay et al, 2018). With this, the
hospital can uphold its reputation as one of the largest medical facilities in the city to
build trust and integrity to its patients, employees, and community.
4. Best Alternative Solution/s:
Downsizing is one of the most difficult decisions that any organization has to
make to combat financial challenges. Unfortunately, St. Mary’s Hospital doesn’t have
the standard policy and criteria in executing layoff due to inadequate performance
appraisal system and inefficient HR intervention. The best course of action would be the
implementation of hiring freeze while incorporating attrition to lessen the salary
expenditures in realizing the target savings. In addition, reducing unnecessary costs
and looking for long-term revenue sources can maintain the institution’s success and
profitability.
Moving forward, training and development for the hospital’s management must
be conducted to understand the utilization of human capital relative to their financial
performance. Technological breakthroughs affect the hospital’s contemporary business
operation. Hence, strategic human resource management is one of the strategic
decisions in operations management that St. Mary ‘s hospital must adapt to develop an
adequate performance appraisal system. Nevertheless, organizations should approach
any workforce reduction with empathy, fairness, and adherence to applicable labor laws
and regulations while providing sufficient support to affected employees throughout the
process.