Zero-based staffing

Medical Laboratory Observer, Feb, 2005 by Christopher S. Frings

Q Does the panel recommend any articles or information on zero-based staffing?

A Marti Bailey points out, "My take on zero-based staffing is that it is a natural extension of zero-based budgeting (ZBB), a budgeting model developed in the 1970s. ZBB was proposed as a replacement for the standard budgeting process of balancing expenditures with revenue, wherein annual revenues and costs of existing programs were estimated. With the traditional budgeting process, if there were an excess of revenue, new programs could be funded, but if there were a net shortage, reductions to current programs would be required. This was a top-down process with little requirement to defend the value of existing programs. The ZBB model, on the other hand, is a bottom-up process where each existing program is analyzed from both cost and value perspectives and must be re-justified in order to remain in the budget. This approach can serve as a means of eliminating existing programs that are no longer cost-effective or important to the mission; it also puts new programs on an equal footing with existing programs for funding. The standard line-item budget process starts with all existing expenses, which are tweaked, and then new expenses are added as needed. ZBB, however, starts with no expenses--all expenses are added from scratch, and a ranking process may be implemented to determine what stays and what goes. ZBB allows you to essentially re-shape the future by requiring you to ignore the status quo."

Ms. Bailey adds, "ZBB should be adapted to suit the needs of the particular organization and is used most often by schools and government agencies. Zero-based staffing is simply including labor in the ZBB process by requiring that each position be justified instead of automatically including all existing positions in, and probably adding new positions to, the budget. Zero-based staffing provides the same opportunities to verify the need for staff positions as ZBB does for other types of expenses. Since this process generally occurs once annually at budget time, other ongoing position-control efforts, such as reviewing vacant positions before refilling them, can be implemented."

Alton Sturtevant reminds us, "Between 50% and 65% of laboratory costs are people and supplies, depending upon the size and efficiency of the lab. As a result, many of us have adopted a hiring process that requires us to use a quantitative productivity measurement. Examples include test per FTE (full-time equivalent), specimen per FTE, and admissions per FTE to justify replacing employees who leave. These templates are also used to justify the addition of any new staff positions. The criteria used in the justification should be easily retrieved (i.e., require no manipulation of the raw data, are defensible, and are known to be reliable/reproducible over time). If the templates are being used to manage a number of facilities, they should be applicable to all locations, both large and small. In most cases, this means that all units should be structured in a similar manner (e.g., personnel assigned to the same department). Tests or other units of measure must be reported in the same manner to ensure an apples-to-apples comparison."

Dr. Sturtevant adds, "The templates should be reviewed periodically to ensure continued utility. Laboratory methods change rapidly, and occasional template review can enhance an individual's productivity. In this case, the criteria should be adjusted to reflect new standards."

Bottom line. A Google search for "zero-based staffing" identified a number of websites, articles, and books on the subject.

Edited by Christopher S. Frings, PhD, CSP

MLO's "Management Q & A" provides practical, up-to-date solutions to readers' management issues from a panel of laboratory management experts. Readers may send questions to Dr. Chris Frings at 633 Winwood Drive, Birmingham, AL 35226; fax, (205) 823-4283; or e-mail, chris@chrisfrings.com. The following panel of laboratory directors, managers, and supervisory technologists have provided their input in the answers given in this column: Marti K. Bailey, MT (ASCP), work unit leader, Pathology, Penn State Milton S. Hershey Medical Center, Hershey, PA; Lawrence J. Crolla, PhD, consulting clinical chemist, Departments of Pathology and Respiratory Care, Alexian Brothers Hospital, Elk Grove Village, IL, West Suburban Medical Center, Oak Park, IL and Northwest Community Hospital, Arlington Heights, IL; and Alton Sturtevant, PhD, vice president and general manager, LabCorp, Birmingham, AL.