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Improve retention rates by spending smarter: A financial approach to recruitment and retention

Contemporary Long-Term Care Weekly, January 22, 2009

Staffing issues are an ongoing problem in many nursing homes. However, some homes are discovering that investing in retention also aids in recruitment.

The money you’re spending on recruiting could be used instead on keeping people in their positions, says Barbara Frank, MPA, cofounder of B&F Consulting, whose office is based in Warren, RI.

“If it costs $3,000 when you lose an employee, could you give that employee some incentives or bonuses to stay instead?” asks Frank.

The following are some incentives that nursing homes can use to retain employees:

• Refer-a-friend bonuses instead of sign-on bonuses
• Team bonuses when a new employee stays six months
• Annual longevity bonuses

“What we look at is how to use the same amount of money but to use it differently,” says Frank.

Quality Partners of Rhode Island in Providence is finalizing a new Staff Stability Toolkit, which aims to assist with retention solutions.

“[With the tool] you can calculate how much your turnover costs are for a CNA, for a nurse, or for a food service worker, and you can look at how to spend that money on keeping employees instead of recruiting new ones,” says Frank.

If it costs you $3,000 every time someone leaves, and you’ve had 40 people leave this year, that costs you $120,000, explains Frank. “Are there things you can do differently with some of that money that would help people stay? And once you help people stay, their retention has its own momentum,” she says.

You need to take resources away from turnover and recruitment, and put them into retention, she adds.

The Staff Stability Toolkit assesses some of the following costs for:

• Newspaper ads
• Checking references
• Physicals
• Tuberculosis tests
• Vaccinations, such as Hepatitis B
• Drug screenings
• Background checks
• Agency hourly rates

“With this tool, each agency can put in their own figures, so that their actual cost is accurate to their own organization,” says Cathie Brady, MS, cofounder of B&F Consulting, whose office is based in Canterbury, CT.

Outside factors
“Another contributor to the instability is attendance issues,” says Frank. That is because unscheduled absences tend to be costly. “When someone doesn’t come to work, you wind up working shorthanded or replacing that person at the last minute at a much higher cost,” she adds.

The function of the toolkit provides a way to calculate how much you’re spending on these absences and whether you are creating unintended incentives through practices such as giving bonuses to employees who take on last-minute assignments. You can spend your money instead on promoting attendance and receive better results, Frank says.

If the problem is attendance, an option is to reward good attendance.

“You can take the money you spend on covering people when they’re absent and convert it to rewards to individuals or work teams with the best attendance,” says Frank. You can give a bonus immediately, or let the bonus accumulate and be collected at the end of the year. That way, you’re also rewarding longevity, Frank explains.

“The drill down allows people to stand back and take a look at what they’re doing, which is a hard thing to do when you’re struggling with staffing instability. Quite often, when there is a lot of instability, management’s focus is on doing everything they can and working hard to fill in the holes day in and day out,” says Brady, adding that this makes it difficult to see that filling one hole sometimes leads to more holes.

Sign-on and last-minute assignment bonuses are examples of incentives that do not directly contribute to the issue of retention.

The role of management
The toolkit can help management take an integrated approach between financial and management resources, says Frank. To implement an attendance award is as much of a management decision as it is a financial decision, she adds.

“You have to ask yourself, ‘What do you want to reward—last-minute assignments and new employees attracted to a sign-on bonus, or the employees you rely on who come in every day and stay with you over the years?’ Spend your money and time on the positive incentives. This practice creates more stability on the floor,” says Frank.

Once you have more stability, you can establish a system in which people can consistently work with the same coworkers and residents.

“[Establishing this system is] a management practice that creates even more stability,” says Frank. “Once people have a regular assignment and regular coworkers, they tend to have better attendance and to stay on a job because they have more attachment and less stress.”

“When a nursing home is struggling with instability, they often have a lot of part-time positions,” says Brady.

The toolkit provides a way to assess your percentage of full-time, part-time, and per diem employees.

Some employers have deliberately moved to part-time and per diem employment for various reasons, such as the reduction of payment for benefits.

Other employers think they can’t find nurses willing to work full-time, so they have a jigsaw puzzle of part-time people.

“Sometimes, nursing homes turn away someone looking for full-time work because they have so many part-time positions. With part-time positions, you often don’t have the same kind of commitment as full-time staff, and you don’t always have people who are totally immersed in new challenges that you’re taking on,” says Brady.

If nurses are only there a few days per week, they can’t follow through on resident care, staff supervision, or facility priorities, she adds.

The drill down in the toolkit allows you to assess staff member statistics and what you could do to shift your incentives to full-time work, says Brady, adding that “when homes make full-time employment a priority and reward it with better pay, they are able to increase their numbers of full-time staff.”

Everyone feels the benefit from stable nursing supervision, she says.

One facility’s success
The Better Jobs, Better Care project, funded by the Robert Wood Johnson Foundation, invested millions of dollars in demonstration projects in five states to determine recruitment and retention strategies.

One nursing home in Vermont participated in the project and was able to turn around its instability and reduce its turnover and absences.

“They had typical and common problems with instability, with turnover and absences, and they were doing things such as hiring part-time people and other practices that greased the wheels of instability,” says Frank.

Through Better Jobs, Better Care funding, Frank and Brady helped the nursing home collect and assess its own data. “They were able to see what their problem areas were and how they could use their money better,” says Frank.

Once the facility attained better hiring practices and a more effective orientation and training program, it was able to give its CNAs a $2.25 per hour raise if they could commit to a full-time schedule, says Frank. “It was [budget] neutral to give the raise because they were no longer paying for all of the absences.”

Focus on training
Investing in training for staff members is an important area to examine. CNAs employed at nursing homes must complete 12 hours of training per year, and several facilities use training videos and tapes. “That costs them so much money in staff time, and [CNAs] don’t get anything out of the hour, they just get a checkoff,” says Frank. For more effective training practices, nursing homes could use that training time to bring staff members together to problem solve and discuss stressors, she explains.

“This has a retention value to it—people feel more connected and able to get help with stresses as opposed to one more mandatory task,” says Frank. “You’re spending the money having people in training. It’s better to spend smarter and get better results.”

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