The cost of inadequate leadership: ineffective management carries a hefty price tag for the typical 120-bed nursing home

Nursing Homes, Sept, 2006 by John E. Baer

Why do America's corporate giants invest many hours annually in supervisory and management development? Simply because they recognize that competent and consistent staff supervision is the principal ingredient of an effective and efficient organization. To achieve this, supervisors and managers need to be skilled in communications, planning, scheduling, evaluating job performance, coaching, counseling, team building, handling employee problems and problem employees, resources allocation, and conflict management.

Effective management and supervision are key to achieving a competent and committed workforce. Because staff are an organization's most valuable asset, it is important to help them become as productive as possible. Managers and supervisors have a pivotal role in positioning your organization as a facility of choice. However, most managers and supervisors cannot achieve this goal on their own. Nursing home administration must provide training to assist managers and supervisors in developing the skills needed to be effective and efficient leaders.

Most nursing home supervisors and managers are selected based on their performance in nonsupervisory positions in their respective disciplines. Typically, they have little or no training in fundamental management skills such as budgeting, motivating staff, handling complaints and grievances, problem solving and decision making, and constructively handling staff absenteeism, tardiness, low productivity, etc. Supervisors and managers who lack these basic management skills can have a costly impact on an organization.

The Administrator's Role

It is essential that nursing home administrators provide their supervisors and managers with the management and leadership skills needed to establish a healthy workplace that contributes to the mental health, high morale, and productivity of its employees. When good management practices are in place and employees are valued and respected, productivity goes up, along with resident and family satisfaction rates. As a result, it becomes easier to attract new residents, employee retention improves, and the cost of staff turnover, agency personnel, and overtime goes down significantly.

The nursing home administrator is responsible for ensuring that managers are properly trained and motivated. In a Gallup poll conducted in the United States, 36% of all executives surveyed identified "insufficient management training and control" as a top cause for poor productivity in their respective organizations.

According to the same Gallup survey, inadequate supervision is the second most frequently observed productivity barrier. In this poll, supervisory skill and behavior problems observed included:

* Absence of people skills

* Insufficient time spent anticipating and preventing problems

* Too much involvement in hands-on operations and personally dealing with detail

* Lack of understanding the supervisor's role as coach and facilitator

* Poor communication skills

* Giving unclear instructions

* Accepting slack work ethics

* Lack of urgency

* Inadequate management training

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Over 30 years of staff development and consulting in nursing homes, our staff at The Center to Promote Health Care Studies have observed the same results as the Gallup poll did concerning staff morale. In those institutions with the highest productivity, it is generally a result of the CEO, upper management, and middle management developing their own management and leadership skills.

The Cost of Poor Leadership--in Dollars and Sense

The lack of supervisory, management, and leadership skills are a major contributor to high nursing home employee turnover. According to a 2003 study by the American Health Care Association cited by Lynn Wallis ("Is the Long-Term Health Care Industry in Crisis?" Oregon Labor Market Information System, 2004), there were 52,000 vacant CNA positions nationwide, with annual nurse aide turnover rates exceeding 60% in 32 states, and exceeding 100% in 10 states.

According to PayScale, Inc., an online compensation information firm, the national average salary plus benefits package of a CNA is $33,120, which includes base salary, Social Security, 401(k)/403(b), disability and healthcare insurance, pension, and time-off expenses. Several studies suggest that staff turnover and vacancy costs for recruitment, training, increased management expenses, and lost productivity have been estimated at four times the employee's monthly salary. Consequently, the turnover of a single CNA will cost the nursing home approximately $11,040. A typical 120-bed nursing home employs 36 to 54 CNAs. Since the national turnover rate for CNAs is approximately 65%, the turnover rate cost of CNAs alone for a 120-bed facility ranges from $258,336 to $387,504 annually. In comparison, the cost of turnover for an LPN is $15,410, and for a housekeeper $8,134. Consequently, even losing two or three CNAs becomes a significant financial loss (see sidebar, "Determine Your Turnover Cost").