Question

Case Study
River Oaks Community Hospital (ROCH) is a private, for-profit, 70-bed healthcare facility established to treat alcohol/drug abuse and mental illness. In the past, it was typically full to capacity. However, its number of patients has declined drastically. This was partly due to the increasing competition from both inpatient and outpatient facilities and to recent reimbursement changes due to an increased number of managed care-type insurers. With these decreased numbers in census, fewer staff were needed.
Institutions in all industries may see revenues decrease to the point that they cannot cover expenses. Employee layoffs are a common response.

This case describes the staffing challenges faced by a newly hired director of operations in a healthcare setting. The crux of the case is that the CEO has demanded staff reductions in all departments. The director has 24 hours to create a plan to satisfy the CEO’s demand. Imagine that you are the newly hired director, and answer the following:

Question and Analysis
1. Analyze the layoffs from the separate perspectives of the CEO, the operations director and employees.
2. Identify and describe two major issues and their potential impacts for each of the following:

1. The CEO
2. The Operations Director
3. Employees

3. Discuss how you would respond to the CEO and to your employees.

Answer 1

1)

It is a complicated case of layoff.

Any layoff-decision goes against the employee interest as employees loss their job. The effect varies directly with the increase in age of an employee. Hence, from perspective of employee, lay off is never expected.

A CEO, believing in making profit is the only objective of any business, is expected to be happy in layoff decision as the decision helps to reduce cost of operation.

An Operation Manager has to implement the decision of the layoff at ground level and has to face the aggrieved employee. As a result, he has to play a critical role even if his/ her consent does not allow him/ her to do so.

2) Two major issues and potential impact of layoff on employees are:

a) At layoff situation, employees loss their jobs and the decision put their family members in a sorry state of condition.

b) Supply of labour increases in job market as a result, there is a chances of down ward pressure on labour wages.

Two major issues for Operation Director are:

a) He has to face the agitated employee. As a result, it is very difficult for any person to handle the situation without taking mental pain.

b) Agitation may spread to other parts or other units of the company. As a result, overall performance of the company may fall for which operation director is responsible to a reasonable extent.

Two major issues for CEO:

a) Company's share price may fall as layoff like case reduce brand value of any company

b) Layoff reduces company's brand value which results to higher rate of employee burnout and turnout among the existing lot and create hindrance to the outside expert-pool to come and join the company.

3)

If I were Operation Director, I would make different plan. Layoff would be my last resort. I would search for avenues to accomodate the surplus employee either in other departments of the company or to other departments of other companies. I would try to provide them training to make them productive. This way I would try to retain their knowledge and confidence on the company.