Industries across the United States have been coming to terms with the Great Resignation. While the October 2021 national jobs report had some good news—531,000 jobs were created, and the labor force grew by roughly 104,000 individuals—the labor force participation rate remained stuck at 61.6%, among the lowest levels seen since the 1970s (in November, the participation rate edged up slightly to 61.8%).
Hospitals and health systems are feeling the full impact of these employment trends. Kaufman Hall’s October 2021 National Hospital Flash Report saw labor expenses rising across all measures, even as the number of hospital workers per patient bed declined. The November 2021 report saw another 2.7% rise in labor expenses from the prior month, and an almost 13% year-over-year increase. Hospitals are at risk of becoming understaffed but need to pay higher wages to compete in a tight wage market for new talent—and to retain existing talent.
The direct and indirect costs of open positions are high. Hospital staff turnover overall increased 1.7% from 2019 to 2020 and stood at 19.5% of staff. For nursing staff, hospitals faced an average $40,038 cost of turnover per position and an average of three months needed to recruit a new, experienced registered nurse. To alleviate staff shortages, hospitals must rely on bonus pay, overtime, and temporary or agency employees, often paying rates significantly above those paid to full-time employees; this also is contributing to the sharp rise in labor expenses cited above. Chronic understaffing of departments can erode employee morale and lead to high turnover rates. In some cases, the inability to adequately staff can force organizations to limit the volume of services they can provide.
To mitigate these impacts, hospitals and health systems must ensure, first, that their recruitment processes enable them to move nimbly in hiring qualified staff, and second, that they are doing everything within their control to improve employee retention.
Improving the recruitment process
Hospitals and health systems are competing not only with each other for clinical talent, but also with industries outside of healthcare for administrative and service staff. Most job candidates will form their first impressions of an organization through the recruitment process, and any bottlenecks or other problems in that process can compound the difficulties of hiring in an extremely tight labor market.
New recruits are one of the best sources of information on potential problems in the recruitment process. As part of their onboarding process, new hires should be surveyed on their experience to gather information on key metrics, including:
- Ease in finding and navigating the application website
- Time between application and initial response
- Quality of information regarding the position and its responsibilities
- Helpfulness of assistance in preparing for an interview
- Time between interview and offer
Organizations should also do an internal assessment to identify potential problems within their recruiting function. Problems areas can include the following:
Imprecise roles and responsibilities. Common job functions within the recruitment process include:
- Talent Sourcers, who identify potential candidates by reviewing online applications, participating in job fairs, etc.
- Recruiting Coordinators, who post jobs on internal and external career sites, schedule interviews, and help with onboarding new hires.
- Recruiters, who participate in candidate interviews and negotiate and process job offers.
Job descriptions for these functions should have clearly defined responsibilities and minimal overlap with the responsibilities of other positions. More importantly, management should ensure that the responsibilities of different positions are not overlapping in practice, which can cause redundant efforts and increase the possibility of important tasks not being completed because of confusion over who is responsible for them.
Capacity issues. Problems can also arise if the recruitment function is understaffed. Management should monitor the workload per recruitment position (i.e., sourcer, coordinator, and recruiter) and, if necessary, hire additional staff to handle the recruitment workload. Given the high direct and indirect costs of open positions, the cost of new recruitment hires can be offset by reducing the number of job openings.
Recruiting process issues. In addition to increasing recruiting staff, organizations should consider process improvements to control the number of job openings for which candidates are being actively recruited. Developing criteria and processes for purging job openings aged over a certain threshold can help decrease recruitment workload. In addition, developing algorithms to help prioritize positions in the queue can also alleviate the daily workload of the recruiting team. These algorithms often prioritize positions experiencing high levels of overtime or contract labor expenses or supporting growth initiatives.
Decision-making authority. To the extent possible, recruiters should be given the power to make and negotiate job offers. Recruiters have better knowledge of the leeway available in negotiating job offers than managers who do not routinely participate in the recruitment process and can help ensure better consistency among offers made for similar positions.
For most positions, we recommend that organizations try to hold the average interview-to-offer time below two weeks to remain competitive. By ensuring that human resource functions are adequately staffed, processes are in place to prioritize actively recruited positions, responsibilities are clearly delineated, and decision-making authority is centralized to the greatest extent possible, organizations can position themselves to move quickly and decisively in attracting new talent.
Pressures on the recruiting process can be alleviated by strong employee retention efforts. At the organization-wide level,  management should consider a range of strategies to enhance retention, including the following.
Enhancing review of compensation and benefits. Wage growth is certainly contributing to turnover rates. To the extent organizations are losing workers to better-paying positions, they have few options but to keep up with market rates. With wages rising rapidly, organizations should consider adopting more frequent and consistent review and realignment of their compensation and benefit packages.
Identifying and addressing management issues. Organizations should also give special attention to management. Managers are among the most stressed employees in the current environment, as they deal with heavy workloads, high turnover, and potential staff shortages. Investing in leadership development can give support to managers who may have had little formal training in management and leadership skills.
Organizations should be diligent in identifying reporting structure and management issues that may be driving high turnover. In addition to monitoring retention levels by manager, organizations should strongly encourage all departing employees to participate in exit interviews. Research indicates that two exit interviews might be most effective, the first conducted by the supervisor of the departing employee’s manager (who may receive more honest feedback) before the employee leaves the organization and the second scheduled approximately one month after departure. It may be most effective for this second interview to be conducted by an external consultant who can bring interviewing expertise and a lack of bias to the process.
If management issues are influencing employees’ decisions to leave, the organization has several options. If the issue is span of control (e.g., managers are supervising too many reports to be effective), management should reconsider reporting structures. If the issue is with an individual’s management style or behavior, the manager in question should be offered coaching services or leadership training, as suggested above. If issues persist, it may be necessary to put the manager on a performance improvement plan, and if conditions do not improve, remove the manager from his or her position.
Developing new career pathways. Many hospitals and health system have internal career pathways in place for clinical areas; they should consider also developing career pathways for employees in non-clinical areas such as environmental services and food services in collaboration with local universities or technical programs. Clear pathways to advancement and continuing education benefits can encourage employees to remain and grow within the organization.
Implementing remote workforce policies. One benefit of the pandemic has been confirmation that certain positions—including data analytics, business intelligence, and certain revenue cycle functions—are well-suited for a remote workforce. Adopting remote workforce policies for these positions can expand the talent pool significantly and improve employee satisfaction.
The Great Resignation may be a temporary phenomenon that will improve as schools reopen, personal savings decrease, and supplemental unemployment payments end, or it may prove to be a long-term restructuring of the labor market. Healthcare leaders should assume the latter. An efficient recruitment process and focused efforts to improve retention are essential tools in building and sustaining the workforce hospitals and health systems will need to meet the healthcare needs of the communities they serve.
 Mitchell, J.: “October Jobs Report: Strong Rebound as U.S. Economy Adds 531,000 Jobs. The Wall Street Journal, Nov. 5, 2021. https://www.wsj.com/articles/october-jobs-report-unemployment-rate-2021-11636061282?mod=hp_lead_pos2
 NSI Nursing Solutions, Inc. 2021 NSI National Health Care Retention & RN Staffing Report. 2021. https://www.nsinursingsolutions.com/Documents/Library/NSI_National_Health_Care_Retention_Report.pdf
 There are several considerations unique to clinical staff retention, which we will be addressing in a separate article.
 Spain, E., and Groysberg, B.: “Making Exit Interviews Count.” Harvard Business Review, April 2016. https://hbr.org/2016/04/making-exit-interviews-count