Managing Service Quality: An International Journal: Article Information

Managing Service Quality: An International Journal
Implementing quality initiatives in the human resources department of a hospital: a case study
David Moody Jaideep Motwani Ashok Kumar
Article information:
To cite this document:
David Moody Jaideep Motwani Ashok Kumar, (1998),"Implementing quality initiatives in the human resources department of
a hospital: a case study", Managing Service Quality: An International Journal, Vol. 8 Iss 5 pp. 320 - 326
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Case studies
Implementing quality
initiatives in the human
resources department
of a hospital: a case
study
David Moody
Jaideep Motwani and
Ashok Kumar
The authors
David Moody is Executive Director of Human Resources,
St Johns Regional Medical Center, Joplin, Missouri.
Jaideep Motwani is Director, Office for Economic
Expansion, Grand Valley State University, Grand Rapids,
Michigan, USA.
Ashok Kumar is in the Department of Management,
Grand Valley State University, West Fulton, Grand Rapids,
Michigan, USA.
Abstract
This paper examines the implementation of the principles
of total quality management (TQM), benchmarking, and
productivity in the human resource function of a hospital
located in the Midwest region of the USA. This case study
illustrates how basic efforts made by the human resource
director resulted in tremendous saving for the hospital
for example, by displaying a small banner helped the
hospital save $10,000.
Introduction
American businesses have embraced the
concepts of total quality management
(TQM), benchmarking, and productivity
measurements as tools to define and improve
processes. Corporate executives have learned
(or are learning) that to compete in a global
market, businesses are required to produce
and market quality products at competitive
prices, never being satisfied with the end
product or process. However, this embrace
has been in the revenue-generating areas. It
has been in companies and departments
where a true bottom line impact can be
dramatically shown. Can the same be said for
those areas that are non-revenue generating
(or perceived to be)? Are service functions
within organizations able to show value
added? If they cant, are they necessary?
A positive vision of the human resources
function is foreign to many practitioners as
well as to many of their customers. If the
human resources department is to survive
into the twenty-first century, however, it will
need to adopt a new self-perception. The
image must be one of human resources as a
value-adding function.
The purpose of this paper is to illustrate, by
means of a case study, how the human
resources director (HRD) of a Midwest hospital in the USA was able to successfully
embrace the principles of TQM, benchmarking and productivity within its department.
The specific processes/methodology used by
the hospital in this particular case can be used
as a framework by other service and/or manufacturing companies for initiating continuous
improvement efforts within their own human
resource functional area.
Background of the hospital
Managing Service Quality

Volume 8 Number 5 1998 pp. 320-326
MCB University Press ISSN 0960-4529
The hospital being investigated is a 94-bed

acute care hospital located in the Midwest
region of the USA. Originally established in
the 1920s, the hospital has grown from a
small five bed, one doctor clinic/hospital to a
32 doctor facility. The hospital offers a full
range of health-care services to a five county
area with a population of approximately
105,000. The facility currently has 94 beds in
operation, 40 of which are dedicated to longterm nursing care.
The hospital has experienced many of the
problems associated with the changing face of
320
Implementing quality initiatives in the HR department of a hospital
David Moody, Jaideep Motwani and Ashok Kumar
Volume 8 Number 5 1998 320-326
health care. In 1990, it was one of five acute

care hospitals located in the county. As of
January 1995, it was one of three. The proximity of the hospital to a large city has also
impacted the hospitals viability. To maintain
market share, the hospital became affiliated
with the largest health-care provider in the
neighboring city in 1990. This alliance has
provided the hospital with needed expertise in
medical specialty areas (i.e. oncology). It has
also allowed the hospital to purchase or contract services (i.e. physical therapy) which had
been unavailable or available at substantially
higher cost to both patients and the facility.
These changes at the hospital resulted in
the first profitable year (1992) during the
previous 12 years. This trend continued
through 1994 where a bottom-line profit of
$2.5 million dollars was realized.
The human resources function was performed by the director and his assistant.
Besides the area of human resources, the
director was responsible for environmental
services, building maintenance, food service,
biomedical engineering, and construction.
raise tempers in an organization is to make a

mistake on a paycheck. Recognizing the
importance of accuracy on paychecks, the
hospital maintained a discretionary fund of
$10,000 to resolve verified discrepancies on
checks. Based on 240 employees, this was a
fund of nearly $50 individual per payday. The
expectation of the hospital administration was
that any errors would be corrected before the
end of the business day. The issue was not
that corrections would need to be made, but it
was the time involved in tracking down an
error, calculating the difference, changing the
tax tables, and issuing a check. The time
required to correct a paycheck took the majority of working hours every payday.
Resolved to change this and in cooperation
with the assistant, the HRD logged the number of errors and their basis (i.e. key punch
errors, failure to record vacation time, failure
to punch in or out). When the HRD discovered that the largest correctable portion was
on account of the human resource departmental key punch errors, the HRD felt that
there was now an opportunity to improve
service, morale, and tempers. On Monday,
following payroll week, a banner was posted in
the human resource department. It simple
read:
The awakening
Two major occurrences in 1992 convinced
the HRD that service functions could easily
add value, though getting people and the
organization to believe that the human
resource function could add value was a more
difficult issue. In the first half of 1992, the
HRD attended several training seminars on
TQM, benchmarking, and productivity
measurement. Based on his positive experience with these problem-solving seminars,
the HRD decided to utilize the knowledge
gained from these training seminars to
improve the operations of his department.
After several discussions with his boss and
assistant, the HRD decided that he would
apply the quality tools to the following two
processes:
(1) calculation and distribution of checks; and
(2) the process of filling job vacancies.
Both the processes and the quality initiatives
instituted are discussed below.
Calculation and distribution of checks
At this hospital, the human resources department was responsible for the calculation and
distribution of paychecks. According to the
HRD, an easy way to decrease morale and
Striving to be the best we can be

90.4 percent accuracy on the last payroll.
This equated to 23 errors on paychecks.

Aghast at her error rate, the assistant vowed to
be the best. After the next payroll, the sign
was changed to 95.8 percent accuracy, representing ten errors. Within three payroll periods, the rate improved to 99.2 percent two
paychecks. Keypunch errors had been eliminated in merely three payroll periods and was
maintained. So proud of her record, the
assistant did not change the signs when she hit
99.2 percent accuracy. Rather, she continued
them, like a streamer, down the wall in her
office. It was the week that she finally hit 100
percent accuracy that she was the most excited. All other signs were replaced except for
the 100 percent and the current payroll
period. Within two months the $10,000 fund
was eliminated. The HRD saved a minimum
of $4,250 in time paid for researching and
correcting paychecks. The most telling fact
was the employee attitude survey done in
1993, listing Satisfaction with payroll as the
only area of high quality performance in
which all employees strongly agreed.
321
Process of filling job vacancies

Later in 1992, the HRD launched another
service improvement initiative. Based on
solicited feedback from department directors, the HRD discovered several opportunities for improving both the service and reputation of the human resource function. Specific to the issue was the length of time to fill
job vacancies. This cycle time indicator,
Time to fill vacancies, is a widely recognized process measurement for employment
services.
At the hospital, managers viewed excessive
time to fill as an obstacle to providing quality,
cost-efficient patient services. When positions remained vacant, managers were frequently forced to schedule overtime with
current employees or to engage temporary
contractors. Both tactics involved incurring
excessive costs. In some cases, for example,
the lack of laboratory technicians or physical
therapists actually resulted in lost revenue
due to the required outsourcing of these
services.
The HRD began by organizing a process
improvement team (PIT) consisting of representative stakeholders in the hiring process:
the employee health nurse who administered
the pre-employment medical exam, the laboratory manager who felt strongly about the
need for improving the employment process,
the human resource employment representative who worked daily on filling vacancies, and
the HRD who served as the resident quality
improvement resource. The committee
agreed to follow a process improvement
model to analyze the time to fill vacancies.
A six-step model for improving cycle time
for an internal service was developed. These
steps included:
(1) flowchart the process;
(2) develop time logs to measure elapsed time
for each step of the process;
(3) compare current performance results to
benchmark data;
(4) analyze the process; target opportunities
for improvement;
(5) Initiate improvements for the process;
and
(6) Evaluate the impact of improvements.
Flowchart the process

The team began flowcharting the entire hiring
process by identifying 15-20 operational steps
in the basic hiring process. Originally, the
hiring process began when a hiring manager
initiated a request for personnel by completing a job requisition. All job requisitions
required signature authorization from the
next level of manager/director. The approved
requisition was delivered to the human
resource department where it was logged and
posted internally for a standard seven days. If
the position was not filled internally, external
candidate sourcing activities (i.e. advertising)
were launched. As applications arrived, the
employment representative reviewed them
and sent appropriate matches to the hiring
department. Candidates for interviews were
identified and the employment representative
was directed to set interviews. When interviews were completed, the hiring manager
selected the finalist who would receive a job
offer. Candidates understood that employment depended on satisfactory results from a
physical exam and urine drug screen. When
the offer was accepted, the health assessment
and urine drug screen were scheduled.
Results were reviewed and employment start
dates were established. Finally, the candidate
reported to work. Thus, the total elapsed time
for the hiring process began with the initiation
of the job requisition and concluded when the
employee reported for work.
While the flowchart helped the improvement team understand how the process
worked, no one knew exactly how long it took
to fill a typical job vacancy. No one had been
tracking the components of elapsed time or
total elapsed time. This was the next task for
the committee.
The six-step methodology formed the teams

tactical approach to improve the time to fill.
The following describes how each of the six
steps led to the redesign of specific criteria in
the hospitals hiring process.
Develop time logs to measure elapsed

time for each step of the process
Time logs were initiated to document elapsed
time between major milestones in the hiring
process (Table I). A time log control sheet was
attached to the job requisition. The employment representative was responsible for
recording the date of each milestone. The
time log analysis for non-exempt job vacancies is shown on the next page. It describes
milestones and indicates the average elapsed
time for a sample of job requisitions. The time
log information provided a current baseline
measurement for time to fill positions. Next, a
frame of reference was needed to answer the
322
internal posting (six days), and health assessments (22 days). Improvements in these areas
appeared to be low hanging fruit, the most
convenient opportunities for reducing cycle
times.
Second, a cause-and-effect diagram provided illustration of the pursuit of root causes
of hiring delays. As a tool for service improvement, cause-and-effect analysis helped organize the groups brainstorming. Using the
traditional four Ms (methods, materials,
manpower, and machinery), the group listed
all possible delays in the hiring process.
Responses were recorded via post-it notes on
a white board. After the flow of ideas was
exhausted, the team reviewed the diagram,
debated items, and further investigated specific issues. Use of this diagram extended
through several meetings and helped guide
the teams efforts.
The group also found that cause-and-effect
analysis helped shape specific innovations in
streamlining and redesigning the employment
process. These improvement initiatives are
described below.
Table I Average time to fill non-exempt job vacancies time log
Average
elapsed time Process milestone
7 days
6 days
8 days
6 days
1 day
1 day
7 days
4 days
2 days
22 days
5 days
69 days
Request for personnel

Authorized job requisition delivered to the HR
Internal job posting
External candidate sourcing initiated
HR reviews applications and sends to the hiring
manager
Hiring manager selects candidates for interview;
informs HR
Interview scheduled
Interview takes place
Job offered
Job acceptance; health assessment scheduled
Health assessment results reviewed; starting date
finalized
Employee starts job
Average elapsed time for employment process
question, How do these times compare to
other organizations?.
Compare current performance results to
benchmark data
Intuitively, the team knew that 69 days was
too long, but needed independent verification
of the opinion. The HRD obtained relevant
data from a national human resource management survey (Saratoga Institute, 1996). The
survey indicated that the average (mean) time
to fill non-exempt positions in the health-care
industry was 22 days. Thus, the industry
mean performance gap (i.e. the difference
between actual performance and the industry
mean) was 47 days.
The performance improvement team
accepted the challenge to begin closing the
gap. Achieving the performance of the industry average (22 days) would present considerable challenges. However, after the 22-day
goal was stabilized, there would be a push
toward driving this goal to lower levels.
Analyze the process: target opportunities
for improvement
Two problem-solving approaches helped in
the work: time log analysis and cause-andeffect diagramming. First, an analysis of the
time log helped isolate specific inefficiencies
within the overall process. Logically, several
components of elapsed time seemed excessive: requisition approval time (seven days),
Initiate improvements for the process

A key element for redesigning the employment process involved placing more accountability with the hiring managers. Based on this
concept, the HRD initiated two important
changes:
(1) Requisition signatures were eliminated on
budgeted positions. The vast majority of
vacancies represented replacements for
positions which were already approved in
the current budget. Thus, signature
approval was largely a redundant exercise.
The HRD calculated that the cost of
delay for the vast majority of requisitions
(more than 95 percent) far outweighed
the benefit associated with the few requisitions rejected. Under the revised protocol, all new positions still required signature approval. Replacement requisitions
could be sent directly to the human
resource department. The estimated
saving was six days.
(2) Advertising was initiated to run concurrently
with internal posting. Logs were kept to
identify specific candidate sourcing tactics (i.e. newspapers, journals, and market areas) which had been successful in
generating hires for the various job categories. Managers were educated about
direct ad placement. Standard advertising
323
within a narrower time frame. Rather than

stretching over a couple of weeks, the goal
was to complete interviews within three
days. The color-coding system facilitated
the selection and scheduling of applicants.
After managers selected interviewees, the
employment representative took care of
scheduling. Neon colored sheets accompanied applications back to the manager.
After each interview, the manager checked
a box on the sheet indicating whether or
not to check references. Reference results
for finalists were discussed with hiring
managers. A job offer would be tendered,
usually on the same day, a start date was
established with the new employee, and the
candidate would be informed of the continuing employment process associated with
the health assessment and urine drug
screening. Estimated savings was 14 days.
copy, which could be faxed, was immediately developed by hiring managers and
sent to the targeted advertisers. While the
employment representative posted the
vacancy internally, external candidates
simultaneously applied as a result of the
advertisements. Estimated savings was 14
days.
Next, the group and the HRD tackled the
average elapsed time of 22 days for health
assessments and urine drug screens. The
following changes were initiated:
Reposition most health and urine drug testing
to post-hire events. Within a hospital, certain
information must be given to the new hire
before they can begin work. OSHA bloodborne pathogen information, rubella titer,
and TB testing remained as these pre-start
tasks. But, after the HRD had obtained
approval from legal counsel and the workers compensation insurance carrier, health
assessment, lab work, X-rays, and the urine
drug screen were repositioned as postemployment events. New employees were
told that successful completion of the
employment process required their
participation in the urine drug testing.
New employees were tested randomly
during their shifts. Any positive test was
confirmed. If testing remained positive in a
second test, the employee was discharged
for failing to successfully complete the full
employment process. Estimated time
savings was 22 days.
Color-coding applications for each category of
vacancy. The next largest block of time was
spent in reviewing applications in the HR
department, waiting for managers to select
interviewees, and scheduling interviews. A
common theme emerged from the investigations into these three steps in all steps,
participants reported that applications
frequently languished on desks or were lost
amid a pile of other important papers.
Therefore, to permit easy identification of
resums and applications, each piece was
color coded with specific neon colors for
each job category. Color coding assisted
both the employment representative and
hiring managers with prompt identification
and disposition of critical applications.
Interviewing windows were narrowed. Managers were required to provide a block of
two or three days and specific meeting
times so interviews could be collapsed
Evaluate the impact of improvements

Continuing time logs revealed that in a period
of less than six months, 48 days had been
eliminated from the hiring cycle. In the period
following the initial work of the team, hiring
managers learned that they could continue to
rely on the employment process to fill positions quickly without sacrificing quality of
hire. Because time logs were rather simple to
maintain, the employment representative
continued to record dates of key milestones
for all job requisitions. This procedure created
the data needed to troubleshoot future inefficiencies that might creep into the process.
Using data from the Institutes Human
resources financial report (Saratoga Institute, 1996), it was estimated that the decline
in the average number of days to fill a job
vacancy produced a profit enhancement of
approximately $314,264 to the hospital. The
most remarkable aspect of this quality
enhancement program for the HRD was that
all the time logs and process changes were
accomplished without the use of computers.
The beginnings in quality improvement,
benchmarking, and productivity within the
human resource function was low or no cost
and added much bottom-line value to the
organization.
The future
In May, 1994, the HRD attended a seminar
presented by the Saratoga Institute headquartered in Santa Ramon, California. Their
324
presentation of the availability of data for

service functions, specifically human resource
personnel, the total lack of its use for improvement, the ease of its use, and the correlation
of the identification and resolution of issues
was convincing.
Following the seminar, the Michigan
health-care human resource administrators
asked for three volunteers to participate in a
pilot benchmarking project using the Saratoga
data. They wanted to have different size
hospitals in different localities to collect,
analyze, and use the information for the next
four months. At the end of the period, the
results would form the basis for the annual
meeting. The topic for the meeting would be
Increasing human resource effectiveness.
The hospital being investigated was selected
as a beta site because of its rural location and
because of the small (< 100) number of acute
care beds. The association funded a graduate
intern to work with the hospitals in data collection. During the summer, as the intern and
the HRD collected data, the HRD began to
recognize the power and potential of internal
and external benchmarking and TQM projects. Buoyed by the new-found knowledge,
the HRD strove to put it to work. It would be
valuable to answer the question the CEO
posed, How do you know that human
resources is adding value to the hospital?. By
collecting hospital-specific Saratoga Institute
data, the HRD was able to compare the
department to the best practices in health care
nationwide and truly know the efficacy. On an
ongoing basis, the HRD thought that it would
be useful to focus on a few key performance
indicators. Backed by solid data, these measurements could become part of a regular
reporting system and would answer the
CEOs question. Saratoga Institute recommended ten measures for success:
(1) revenue per employee;
(2) human investment ratio;
(3) compensation/revenue;
(4) total compensation/expense;
(5) health-care factor;
(6) voluntary separation rate;
(7) turnover cost;
(8) cost per hire;
(9) training return on investment (ROI);
(10) specific corporate issues
and being honest about the time that the

HRD could commit to the project, the HRD
selected seven of the ten for continuing measurement.
Each purpose could easily be incorporated
into the current human resource and corporate structure. The seven chosen were:
(1) Revenue per employee. Truly a traditional
measurement used by management, it is
simple to understand. Over time it could
be used to trend efforts of the hospital
against trends in the industry. It also is an
indicator of the control of the number of
employees. Increases in employees and
revenue would tend to slide downward;
decreases in employees and revenue
should tend to move upward.
(2) Human investment factor. Is there a relationship between the amount of money a
corporation is willing to spend on their
employees in return for increased productivity? Is there a point where increasing
the dollar spent on people does not return
equitably on revenue? Over time, does
downsizing and restructuring work? Will
there be an unchecked rise in the human
cost after a downsizing? These questions
could all be addressed by using this
factor.
(3) Compensation/revenue. The best run organizations know that they need to compensate employees adequately. This factor
would help to define adequately in the
given marketplace. A shift in this could be
an indicator of increasing or decreasing
productivity.
(4) Total compensation/expense. Labor costs
are a true cost of doing business. While
profitability and lower compensation can
come from layoffs, so can decreased
morale and lower productivity. Management of all compensation (i.e. control of
benefit cost through outsourcing or plan
design changes) can have the same longterm effect. A decrease in total compensation would relate directly to the bottom
line.
(5) Voluntary separation rate. The successful
human resource manager recognizes that
the job market for skilled labor is a sellers market. The cost to maintain an
employee is much less than continually
replacing one. Retention of key employees is essential. Measurement of this
factor, in conjunction with exit interview
Each factor had a specific purpose. Carefully

reviewing the significance of each factor,
analyzing the information that was available,
325
data, would give an accurate picture of

why employees leave.
(6) Turnover cost. The success of the earlier
project at the hospital showed the saving
available through efforts to reduce the
length of time to refill positions. By controlling turnover costs, direct and indirect, a significant impact can be made on
the bottom line. This must be a continuing process, both to minimize turnover
while streamlining the selection and
hiring process.
(7) Specific corporate issues. Each corporation
has specific issues that lend themselves to
benchmarking and TQM processes. The
key is to properly seek them out, design a
process to resolve them and then improve
the process. The HRD felt that this point
in particular would lend itself to the best
and fastest sources of productivity
improvement.
operation. By Saratoga Institute data, the

department was operating at 120 total fulltime equivalents (FTEs) per one human
resource department FTE, which was above
the 90th percentile. The goal was to use these
data to help justify an additional FTE for the
department. The benchmarking efforts are
currently under way and only time will judge
the effectiveness of these measures.In conclusion, it can be said that the quality improvement efforts have proven to be quite successful. The six-step process improvement model
was also extremely effective. In the HRDs
opinion, the quality initiative programs have
succeeded. The authors of this study hope
that similar quality initiatives and improvement programs will be implemented by other
hospitals.
The HRD was also resolved to show the

president and CEO that the assistant and
himself were running an extremely efficient
Saratoga Institute (1996), National Human Resource

Management Survey, Saratoga Institute, Saratoga,
CA.
Reference
326
This article has been cited by:
1. Faisal Talib, Zillur Rahman, Mohammed Azam. 2011. Best Practices of Total Quality Management Implementation in Health
Care Settings. Health Marketing Quarterly 28:3, 232-252. [CrossRef]
2. Usha Manjunath, Bhimaraya A. Metri, Shalini Ramachandran. 2007. Quality management in a healthcare organisation: a
case of South Indian hospital. The TQM Magazine 19:2, 129-139. [Abstract] [Full Text] [PDF]
3. Nirwan Idrus. 1999. Towards quality higher education in Indonesia. Quality Assurance in Education 7:3, 134-141. [Abstract]
[Full Text] [PDF]

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Background of the hospital