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in Hospitals:of a Universitynd a Community HospitalTRI, JACK W ELLS, JEFF McK UN E , and MARY BREWER

The human factor is central to heahhcare, yet itsent has remained beyond the reach of health-in a universityd a comm unity hospital. The fmdings indicate that the twoa clear understanding of their strategic intent

as a result, their human resource (HR) prac-and direction. Whereas thecommuni-the interrelationship between cultureRM , the university hospital did n ot. Moreover, the uni-ofcom-in managing HR function, which hamperedts ability to identify competent HR managers and employees.

in the pastew years in managing its culture and people by recruiting aHR manager. The relationship between HR prac-ices and clinical outcomes was much less clear in the univer-itwas in the community hospital.ey words: healthcare, human resource competencies,uman resource strategy, organizational strategy, strategicuman resource management

here has been a dramatic shift in the role ofhuman resource management (HRM) inrecent decades. Traditionally, the human

resource function has been viewed as primarilyadministrative, focused on the level of the individ-

ual employee, the individual job, and the individ-ual practice (Becker, Huselid, and Ulrich 2001),with the basic premise that improvements in indi-vidual employee performance would automaticallyenhance organizational performance. In the 1990s,an emphasis on strategy and the importance ofhuman resource (HR) systems emerged. Bothresearchers and practitioners began to recognizethe impact of aligning HR practices with organiza-tional strategy. HR has now emerged as a strategicparadigm in which individual HR functions, suchas recruitment, selection, training, compensation,and performance appraisal, are aligned with eachother and also with the overall strategy of the orga-nization. This new approach of managing humanresources has generated much interest in scholars.

Strategic management of HR in healthcare isimportant in delivering high-quality patient care(Khatri 2006; Khatri et al. 2006). Wages constitute65%-80% of the total operating budget in a typi-cal healthcare organization (Dussault and Dubois2003), making HR an important factor that affectsthe fmancial performance and viability of health-care organizations. Healthcare organizations are

the lead au thor of the study, received his Ph D in organizational behavior and human resource management fromofBuffalo, New York, and his MBA from the Indian Institute ofManagement, Ahmedabad. He is a member oftheof strategic human resource management and transformational leadership in the Department of Health Management andofMedicine, University ofMissouri, Columbia. Jack Wells is a physician of emergency medicine atAudraino, Missouri. He earned his MH A from the De partment ofHealth Management and Informatics at the Uni-ofMissouri, Columbia. Jeff McKune is anexperienced management professional with strong focus onhospital operations,and human resource management. He earned his MHA from the Department ofHealth Management and Informatics athe University ofMissouri, Columbia. Mary Brewer is a hospital administrator at St. John's Hospital inLebanon, M issouri.

Copyright 2006 Heldref Publications

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facing increasing pressure to deliver high quality ofcare at lower cost, which is likely to continue forthe foreseeable future. In view of the significantportion of healthcare costs that wages constituteand critical role that people play in affecting quali-ty and safety of patient care (Goldstein 2003 ; Kha-tri 2006), it is imperative to manage HR moreeffectively to provide affordable and high-qualitypatient care. However, current HR systems andpractices in healthcare allow approximately60%70% capacity use of their workforce at best(Bach 2001; Buchan 2004; Gallup ManagementJournal 2001). This is largely due to the deploy-ment of traditional HR practices premised on closemonitoring and tight control of employee behavior,which greatly constrain employee initiative, effort,and motivation, and undermine the optimal use ofhuman capacity in the organization (O'Reilly andPfeffer 2000).

The new developments in customer involvementdemonstrate that services with particularly inten-sive and personal contact lend themselves to situa-tions in which customers take on very powerfulroles (Maas and Graf 2005; Schneider and White2003 ) . Th is is especially true of healthcare, w hich isa very personal service that intimately affects thelives of its consumers. Two critical elements thatdefme a service strategy for high-contact serviceorganizations are HR and service delivery systems(Goldstein 2003). Although operat ions manage-ment has paid scant attention to the role of HR inservice design, HR literature has lacked the cus-tomer focus necessary for service organizations(Schneider and White). Gonsiderable efforts mustbe made by healthcare organizations in developingjobs and work systems, individual knowledge andskills, and interpersonal skills for employees todeliver safe, affordable, and high-quality patientcare (Goldstein).

Khatri and Budhwar (2002) and Khatri (2003)identified several key issues for strategically manag-ing HRM and categorized them into two generalgroups: {a) organizational-level issues and {b )HRM-specific issues. The set of organizationalissues includes the influence of organizational struc-ture, strategy, and culture on HRM practices. Theset of HR-specific issues considers the influence ofHR strategy and competencies on HR activities,practices, and effectiveness. For understanding thestrategic role of HRM in healthcare organizations,an additional issue ofthe impact of HR practices onclinical outcomes was added. Thus, in this study, we

examined the role of these six issues in stratHRM in healthcare organizations. However, wnot discuss the HR strategy issue further, asfindings on the issue were not significant. Mrespondents were simply unable to respond wasked if their hospital had an HR strategy.

The first issue we examined in this study organizational structure and its relationship HRM. Organizat ional structure is an imporvariable that affects all organizational systems processes, including HR. In the past, HR wasperceived to make a significant impact on organtional outcomes (Sims 2002). Consequently, was accorded a low status in many organizatiand often lacked its own identity. However, thisuation has changed in the past decade (Lawler Mohrman 2003). The role and influence of have increased substantial ly. Considering healthcare organizations are service oriented knowledge based, HR will likely play an even msignificant role in healthcare organizations thawill in other organizations (Khatri 2006).

The second issue in the study was organizatistrategy. The alignment of HR with organizatistrategy has received an overwhelming amounattention in the past two decades (Becker and Ghart 1996; Carmeli and Schaubroeck 2005; Richand Johnson 2001). It is important that emplobehavior supports organizational objectives strategy. Organizat ions must understand tstrategic imperatives and implement HR practthat will result in employee behaviors that are portive of those strategic objectives.

The third issue was culture. It is necessarymanage the corporate culture of a healthcare onization well, in turn implementing a healthprocess capable of delivering high-quality clinoutcomes (Waldman, Smi th, and Hood 20Corporate culture in hospitals has undercurrof strong subcultures across clinical specialties professions. Senge (1990) termed healthcareantilearning industry because of its dysfunctioculture. HR's role is critical in building an ative, learning culture with the capacity for rachange by creating right values and behaviorshealthcare workers (Anson 2000; Vestal, FralandSpre ier 1997) .

The fourth strategic HRM issue was relatedHR competencies. Scholars argue that HR can bsource of sustainable competitive advantage fororganization (Wright et al. 1998). Consequentlfirm's HRM function, which has significant resp

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sibility in managing this important resource, shouldreceive more commitment from the organization.However, Barney and Wright (1998) pointed outthat, in reality, the scenario is quite different, andnoted that one of the reasons why HRM executivesare not invited to the strategic planning table is thatthey are perceived to lack required competencies.Past research suggests that the competency level ofHR managers has a major influence on the level ofintegration between the HR fun ction an d strategy(Khatri and Budhwar 20 02).

The fmal issue we examined in this study wasthe relationship between HRM and clinical out-comes. Th e relat ionship between H R M and orga-nizational outcomes has been a widely researchedtopic in the past 15 years. In one of the most citedstudies in HRM, Huselid (1995) investigated over900 large firms in the Un ited States and found thata reasonable (one standard deviation) increase inhigh-performance work practices was associatedwith a 7% decrease in turnover and, on a peremployee basis, $27,044 more in sales, $18,641more in market value, and $3,814 more in profits.Empirical studies examining the relat ionshipbetween HRM and service quality are also prolif-erating (Gelade and Ivery 2 0 0 3 ; Manring andBrailsford 2001). For example, Manring andBrailsford found that encounters of patients withhospital employees are an important driver of per-ceived service quality and patient satisfaction.Gelade and Ivery reported that HRM impactedthe performance of a bank branch both directlyand indirectly. In its direct effect, understaffm gand working overtime elevated job demand, caus-ing stress and depressed individual performance.HRM influenced branch performance indirect lyby affecting work climate of the branch. Theresearchers noted that satisfied employees radiatepositive affect, producing an emotionally satisfyingexperience for the customer.METHOD

We studied two hospitals in the Midwest: a uni-versity health system and a community hospital.We interviewed the members of the senior man-agement team at the two institutions to investigatethe six strategic HRM issues identified earlier. Wedeveloped a semistructured interview questionnairefor eliciting their responses (see appendix). Inter-views were conducted in person, recorded, andtranscribed to preserve the tenor of the interviews.All of the interviewees agreed to be recorded.

The university health system was an academichealthcare institution. It consisted of the universityhospital and several other facilities. The universityhospital had 250 beds and included a level 1 trau-ma center. One of its major missions was to bringpreviously unavailable advanced medical care torural areas. Th e H R dep artme nt at the system levelmanaged HRM needs for all the facilities withinthe healthcare system.

The community hospital was a not-for-profi thospital governed by a local, elected board oftrustees. It provided services to residents in a radiusof approximately 60 miles surrounding the coun tyseat. The hospital had 198 beds, employed over1,200 people, and accoun ted for 2 1 % of the eco-nomic production of the county. It offered a widerange of services to the community.

We interviewed four senior managers of the uni-versity health system: specifically, the CEO of thesystem, the CEO of the university hospital, thedirector of HR of the university health system, andthe nurse manager of a clinical department at theuniversity hospital.

We interviewed five senior managers of the com -munity hospital . These included the CEO, thechief clinical officer, the chief financial officer, thedirector of acute nursing services, and the directoro f H R .RESULTSOrganizational Structure and HRM

To examine the location of HRM in the overallstructure of the organization, we posed the follow-ing questions to the interviewees: Is HRM a sepa-rate department or is it part of other departments,such as finance or administration? Does the HR orpersonnel manager participate in executive andstrategic planning meetings? Are there majorchanges taking place in the human resource depart-ment of your hospital over the past five years?The University Health System

All of the respondents stated that HRM was aseparate department within the organizat ion. TheCEO of the system noted, "Human resources isactually a corporate service, not just a depart-ment." Another description given by the hospitalCEO was, "It 's a corporate function in our respec-tive hospitals and clinics, and the entire systemtaps H R M staff for their services."

All the interviewees stated that the HR directorwas part of the corporate management team and

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12 Vol. 84, no. 4 Fall 2involved at the highest level of corporate decisionmaking. The HR director meets with the seniorcorporate management team on a weekly basis .

The primary changes in the HRM departmentin the past five years have largely involved the inte-gration issues of the entire system. With the acqui-sition of a community hospital, one ofthe primarygoals has been to integrate HRM processes acrossthe organization, and to standardize HRM prac-tices. A significant consequence of this integrationhas been that the HR function at the universityhospital manages HRM practices throughout theentire university healthcare system. Another changein the HRM system was the development of lead-ership training programs to develop leadershipskills among managers throughout the system.

The Com munify HospitalEach of the five interviewees stated that the HRdepartm ent was a separate department. T he depart-ment was also responsible for training and educa-tion at the hospital. The HR director reporteddirectly to the CEO.

The HR director was involved in some of thestrategic planning within the organization, but theinterviewees generally indicated that full strategicinvolvement was not evident. Further, the HRdirector and the nursing director both indicatedthat more HR involvement in strategic planningwas warranted. Of key significance was the CEO'sview that HR is becoming more important. Hecom me nted , "B ut in the last Five years, hum anresources, training, and de velopment have becomemuch more of a strategic issuea strategic asset."

With regard to changes in HRM in the past Fiveyears, all but the chief clinical officer indicated thatthere have been significant changes. Open jobpostings were greatly reduced, retention was muchbetter than in recent years, comp ensation a nd ben-eFits were much more competitive, and policieswere being improved and followed. In addition,employees and management viewed the HRdepartment more favorably than they did in thepast. This was all attributed to the arrival of thenew HR director three years ago and the resultingorganizational focus on the importance of HR.Organizational Strategy and HRM

When examining this issue, we asked the inter-viewees to describe the strategy of their organiza-tion. We then asked them the extent to whichHRM was involved in strategy formulation and

implementation. The specific questions posedinterviewees included: (a ) Please describe to usstrategy of your company, (h ) Does HRM play significant role in implementing it? (c) What is the HR department supposed to performyour organization? (d ) Is the HR department ato perform the expected role?The University Health System

In response to the issue of overall strategy ofhealth system, most of the interviewees responby reciting the value and mission statements of organization. The system CEO elaborated as lows: "As to H R M , clearly we have identified major goals in nine major areas of developmover the next 18 months while we do more trational strategic planning. One of those goals isbe the employer of choice." He stated that the gwas to have "the best of the best to seek us out to come here." It is interesting that the univerhospital CEO stated that there was "nothing I print out and show you." However, she observe that one of the goals of the hospital wasbe an employer of choice.

With the exception of the nurse manager, interviewees were in general agreement that H Rplayed a significant role in the implementationorganizational strategy. Most of the individustated that the role was to provide manpower sport, to plan, and to anticipate the needs of institution as it undergoes organizational chanAnother role in implementing the strategy wasevaluate the local employment market to detmine the best sources of employees and stafffrom the available resources. The hospital Cstated, "I think what we need to do is identwhere we have additional human resource neand how we are going to find those [people]."

The interviewees (with the exception of nurse manager) agreed that the HR departmentable to perform its role in the organization. agreed that the role of HRM has changed recent years. As the system C E O n oted , "H R Mvery different from the days of old, when it wapersonnel depar tment with jus t record keepand forms to fill out." When elaborating, onethe respondents del ineated the t radi t ional HRprocedures related to processing employmeand added s taf f development and educat ion. TCEO further stated, "I think we have to investHR just as we invest in plant, property, aequ ipm ent . "

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However, the clinical nurse manager had a dif-"They are limping on their best days." This

The Com munity HospitalEach of the five interviewees articulated theon's mission: wan ting to be the p rovider as well

nd growth. Several stated that it was significanthat the first pillar was people, as their people were

It is interesting that, when asked if the HRepartment played a significant role in imple-enting the organizational strategy, all of the

nterviewees except the HR director stated thatHRM was very important in this regard. The HR

irector felt that the involvement of his depart-ent in helping the organization strategically was

not as significant as it could be. His view was thatospitals have generally not realized the value of

HR in accomplishing their strategy. He stated:My own personal feeling, and Fve been in the fieldfor 25 years, is that I don't think hospitals under-stand that yet. They don't understand the connec-tion between being successful strategically, andimplementing those goals and objectives from astrategic standpoint, and the role that people playin making it happen. In my view, there is still ahuge disconnect there.However, he stated that the hospital was making

a concerted effort to narrow the disconnectbetween strategy and HRM. He believed thatHRM was becoming more of a key enabler of theorganizational strategy. The HR director went onto state that the best hospitals and institutionsunderstand the relat ionship between HRM andorganizational strategy.

Each of the interviewees gave thorough responseshen asked what role HR should perform within

their organization. Managing pay increases based onmarket or merit standards, providing employeerecruitment and termination services, supportingdepartm ent heads and upper man agement, and beingan advocate for employees were all roles that theyconsidered important for HRM. The CEO probably

said it best by using an analogy. He said that theHRM flinction was formerly much like an assessor'sofficelots of detail, paperwork, and administrativefocus. He went on to state that HR M has much morethan an administrative, paper-pushing function, andincreasingly serves a guiding role in the organization.But the CEO was clear on this point: HRM mustcontinue to provide the assessor function and ensurethat details, paperwork, benefits tracking, and allrelated legalities are properly managed. If the detailsare not right, HRM will never have the credibility tocontribute in more meaningful ways.

All interviewees felt that the H R dire ctor an d hisdepa rtmen t performed well. Th e nurse managerdid indicate that more could be done to developpeople and grow them professionally through edu-cation. She also thought that the HR directorcould be more of a spokesman for management toclarify the organization's commitment and depen-dence on its people. The chief clinical officer indi-cated tha t H R co uld be mo re assertive in its role:

I would like them to be more creative for recogni-tion and rewards. Checking with other HRdepartments to see what they are doing. Taking amore assertive role in guiding and leading. I thinkleadership would welcome HR taking a moreassertive role.Organ izational Culture and HRM

The interrelat ionship of cul ture and HRMturned out to be one of the most interesting issuesto investigate in this study. The history of the twoorganizations had contributed enormously to theshaping of their current cultures in positive and neg-ative ways. We asked the following questions on theinterrelationship between culture and HR: What isthe culture of your organization (e.g., informal val-ues, beliefs, norms held by organizational mem-bers)? Do you see any link between the culture ofyour organization and HR function? Or, are theydisconnected and inconsistent with each other?The University Health System

All of the respondents gave the impression, eitherdirectly or indirectly, that the culture of the organi-zation was not good, but that it was getting better.In explaining why the culture was not good, theoverall reason given was the environment generatedduring recent financial difficulties and measurestaken to complete a financial recovery. The systemCEO discussed the impact of recent history in thefollowing quote:

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Given our history of financial difficulty and hav-ing a great parade of consultants in here, with lead-ership turnover, it's been a confusing, chaotic timeto have a culture. We have some very dedicatedand talented people, but not very cohesive.He also stated that the time had come to focus

on quality, and if that was done well, the financialposition would continue to improve as well.The HR director s tated: "I don' t think the cul-

ture of the organization is really good now, but itis improving." This respondent attr ibuted poorculture to employees being afraid of losing theirjobs in the light of recent financial cutbacks. TheHR director also noted that, in top-level manage-ment, the discussion had been largely focused onmeeting financial targets, and felt that in all of therecent emphasis on financial recovery, manage-ment had stopped considering the individualemployee. However, she felt that the leadershipwas focusing on people issues more, with most ofthe financial turnaround in the past.

All of the respondents felt that the employeeswere very dedicated, but the culture in which theyoperated had not been conducive to growth anddevelopm ent. The consensus was that the situationwas changing, and that top management had madethis change a priority. In a side note, the systemCEO made the following remark:

The other part that I've found is that we've had atendency to look at [outside institutional manage-men t programs] . . . we don't need somebody else'sprogram; it needs to be our program . It needs to beus and o ur pride and our expectations and ou r val-ues. And it needs to be generated internally, notjust written down.All of the respondents felt that there was a link

between culture and HRM, although in elaborat-ing their answers they offered different explana-tions as to what exactly that linkage was. Onemanager stated that there was a link in the values,but none in the overall departments. Anotherrespondent s tated that the culture and HRM func-tion were related, and thought that was one of thereasons that the culture was becoming more posi-tive. Anoth er reason offered was that H R M wouldhave a strategic plan of its own for the first timesince the early 1980s. T he H R directo r stated,"We have a great core group of employees who arededicated to the institution." This statement wasgiven as the main reason that a cultural turn-around was coming. The hospital CEO stated, "Ithink organizational culture is not the responsibil-

ity of HR, it's the responsibility of all senior leers and managers; I don't think it's something delegate to HR."

One of the points made was that of f inding right employee for the right position. The sysCEO made this clear by stating:

We have to be sure that we are hiring employeeand evaluating employees and they [HR] have tbe sure that our workforce is symbolizing ththings we said were important. And that we're nosetting people up to fail.The Comm unity Hospital

Each of the interviewees agreed that manament and the organization did not have a cunderstanding of the culture five years ago. CEO stated, "Five years ago, we did not ethink about culture. We had a very naive viewculture." The culture was whatever the cultwasthere was no attempt to understand or shit in any way. When the hospital began using Press Ganey survey, with over 7,000 healthcfacilitiesthe largest database of its kindunfavorable scores were reported, managembegan to seek out the reasons for the scores. Esstially, an organizational epiphany occurred thand a half years ago, shortly after the arrival ofnew HR director. The organization beganunder s tand the connec t ion be tween cu l tupatient satisfaction, and organizational succThis understanding had broadened since thand the CEO firmly believed that culture drevery aspect of the organization, from financialspatient satisfaction. Even more significant was realization that, through the HR function, magement could shape the culture.

Most of the interviewees conveyed a sense tthe culture was evolving, and that HR was a potive change agent. They felt strongly that they won the right trackan upward trackbut tthey still had much ground to cover. Behavioexpectations were set in policy, and those emplees who became involved in backbiting or otnegative behaviors were disciplined. The organtion was working to become more proactive wtheir intentions on shaping culture. An emplowas terminated for inciting discontent, and evaluation of directors included metrics on the ctural development of their departments. In essenthe organization was tying its cultural intentionscompensation for making changes last.

These perceptions regarding culture were nea

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encies of HR Man agers an d HRMWe asked respondents about rheir views on the

R man agers in your institut ion possess those

he University Health SystemAll of the respondents agreed that H R managers

all per-

ee in HR M , there are certain

The system CEO felt that the most important

He observed:We have multiple operating units, and each of thoseunits has some HR in it. But in the chief HR offi-cer . . . what I look for is the leadership quotient.Yes, I need this person to understand the Fair LaborAct and tax implications and those pieces, but whatI really want is for him to have leadership of thosepeople who are the experts in those technical arenas.There was a general agreement that HR man-

gers did possess needed skills and competencies;owever, on elaboration of the discussion, thereommented that HR managers "do not suppor t

managers in grievance issues, they support themployees. Therefore, managers go into these

things with no support."Some of the more senior managem ent interview-ees seemed to feel that the skills were present, and

that they were working well. The hospital CEOstated, "I think overall, compared to other places,there's a higher standard here. I think there aresome areas where we could continue to developstaff to better perform their role." She went on toexplain needed skills in this statement:

We are part of a bigger system. W e struggle some-times getting information that's important; that'simp ortant to us as a healthcare provider/employer.Ou r needs may be different than the rest of thesystem.This response may also indicate that the

desired skill sets may not have been present inthis Institution.The Com munity Hospital

Each of the interviewees stated that special skillswere needed, and there was significant agreementas to what those skills should be. Interpersonalskills were recognized by all as being the mostimportant. The chief financial officer stated theimportance of these skills:

He has people coming in his office all the time, andhe has to have great interpersonal skills. I am notjust talking about visiting with people. He has todeal with some pretty tough situations sometimes.Additional skills and competencies that were

mentioned included knowledge of employment law,analytical skills, honesty, and counseling skills. Oneof the respondents stated that analytical skills were acritical requirement. Another respondent said thatan HR manager must be able to deal with individu-als at multiple levels in the organization and must beable to adapt to different situations. Several indicat-ed that an HR manager must be able to supportboth employees and managementa difficult task.

The HR director went on to stress the impor-tance of being able to connect with employees attheir level and m aking sure that people understoodthat the H R manager was there to assist. Th e C EOsummed up his confidence in the current HRdirector by stating, "If you wanted a list of thoseskills, you could just catalog the skills of our HRdirector, as he is the total package plus."

All respondents felt that the HR director had thenecessary skills and competencies, and that he wasapplying those skills and competencies in an effec-tive manner.HRM and Cl inical Outcomes

With the current emphasis on quality of care andmedical errors throughout the healthcare industry.

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H R M may have an impact on prevention of medicalerrors and improvement of quality of care. Qualityof care has two components: {a) technical quality(i.e., correct diagnosis and treatment) and (b ) servicequality (i.e., treating patients with dignity and con-sideration). The relationship between HRM prac-tices and organizational outcomes has been a fertilearea for research in the past 15 years. There is nowmuch empirical evidence supporting the relation-ship between HRM and organizational outcomes ina variety of industry settings. The evidence linkingHRM to quality of services has begun to emerge aswell. For example. Rondeau and Wagar (2002)found that hospitals that had adopted m ore progres-sive HRM practices reported improved efficiency,better fiscal health, increased flexibility, and greaterreputation than did those hospitals without suchpractices. Khatri et al. (2006) argue that traditionalHRM practices adversely affect medical errors andquality of care by fomenting a culture of blame anddemoralizing the workforce. Strategic HRM prac-tices, on the other hand, improve organizationallearning and employee morale that, in turn, boostquality of care and reduce medical errors. A study byWest et al. (2002) of 61 acute-care hospitals in Eng-land revealed strong relationships between HR prac-tices and patient mortality. The study reported thatthe extent and sophist icat ion of performanceappraisal in the hospital were strongly related, butalso that there were links with the sophistication oftraining for staff and with the percentage of staffworking in teams.The University Health System

Interviewees saw a significant role of H R M inpreventing medical errors and enhancing quality ofpatient care. However, views differed as to thedegree of involvement that HRM actually had inaffecting medical errors and quality of care. Thesystem CEO stated that quality of patient care wasa function of hiring the most qualified people andcontinuing to educate them. He added:

We get the best and the brightest, but also we haveto continually invest in the education of ouremployees. I mean you invest in your buildingsand technology; you have to invest in your people,too. That's a hig part of how you improve yourquality of care.The HR director fel t that HRM had a profound

effect on quality of care and cited as evidence thehigher quality of both employees and applicants inrecent months. She noted:

[The] philosophy for a long time was just get warm hody in here and we'll be OK . Now, theremuch more education and training, with all thACLS, BLS, education center, and making sustaff are competent to provide care.In this statement, the HR director was attem

ing to demonstrate that the HR function ofhealth center is evolving from a hiring and fimentality to a hiring, training, and developmpoin t of view.

Expressing a different view, the nurse manstated that H R does affect quality and errors, only to the point of hiring and firing. observed, "They are primarily concerned with ting people in the door. They have no mechanfor training or for retention."

Th e hospital C EO felt that HR M had a portive role in regard to errors and quality of and made the following statement:

They help us articulate and maneuver througwhat ou r policy will be and how we deal with thstaff that may be involved in a medical error. Howe deal with staff that may be involved in untoward events is important to us in terms of ougoals on the patient safety front.She felt that the actual responsibility for ma

ing quality of care and medical errors did not to HRM, but to whatever system was in placmanage the error.The Community Hospital

Regarding the impact of HRM on clinical comes, the staff identified training and educaas important components of an effective HR tem. This is particularly understandable becathe HR department was also responsible employee education. Job training, remedial tring, and skills assessment were seen by one inviewee as the primary ways that quality of could be improved and medical errors couldreduced. Lack of training can lead to poor heacare and medical errors. Two of the respondmade the connection between culture and clinoutcomes. The CEO stated it plainly by say"Having a bunch of disgruntled employees don't care can be just as big a reason for mistand erro rs." Tb e chief clinical officer com me n"If people are empowered and take ownersthey have a great self-governance in knowing wthey should and should not do."

The recruitment processes were also seen asimportant factor in improving quality of care

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reducing medical errors. This included performingbackground checks and screening individuals withthe requisite professional and clinical skills. Aninterviewee pointed out that leadership recruit-ment was also important so the clinical staff hadadequate supervision and guidance.

Not all of the respondents made a connectionbetween HRM and quality of patient care. Thechief financial officer stated, "I would say that HRhas no more influence on patient safety than theaccount ing depar tment does . "DISCUSSION AND CONCLUSION

This study revealed a number of interesting find-ings. However, before discussing the major find-ings, we would like to note a numb er of limitationsof this study. There are three main shortcomings ofthe study that imply that the findings of the studyshould be interpreted with caution. First, we inves-tigated only two hospitals in the Midwest. Thus, itis hard to generalize the findings across all U.S. hos-pitals. Hospitals vary greatly in their structure,strategy, environment, culture, and HRM prac-tices. The challenges they face and the way theirmanagement responds to these challenges are com-plex issues. Second, the data collected in the studyare based on interviews, which may represent thebiased views of interviewees. For example, thenurse manager of the university hospital had quitea different view than other managers did. It is pos-sible that interviewing more managers might haverevealed even more differences in opinions aboutvarious issues examined in tbis study. The thirdmajor limitation of the study is that the sample inthe study included only managers, but not theemployees. It is very likely tha t employees m ay viewthe issues differently than their managers. Never-theless, the issues examined in this study are quiterelevant, and more research studies with diversesamples of hospitals and employees using a varietyof methodologies would shed light on them andenhance our understanding of how to manage thevital human factor in healthcare more effectively.

The findings of our study of a university hospi-tal and a community hospital in the Midwest sug-gest that H R issues are receiving increasinglygreater attention from the hospitals. The trend islikely to continue as hospitals grapple to develop abet ter unders tanding of s t rategic HR issuesinvolved in healthcare.

We studied a number of issues that may be keyto comprebending the strategic role of HR in hos-

pitals. Regarding the first issue on the relationshipbetween HR and organizational s tructure, wefound that botb the university and communityhospitals had a separate HR department headedby an HR director. The HR directors of both hos-pitals participated in strategic planning meetings.In the univ ersity hospital, H R was treated as a cor-porate service with a great degree of centraliza-tion. Civen the complexity of the system and cen-tralized HR , H R initiatives seemed slow and lessresponsive to the needs of various departments inthe system. The university hospital emphasized agreat deal of uniformity and standardization inHR practices across departments and organiza-tional units , which, we felt , made H R functionsomewhat unwieldy. We also felt that the HRdirector's role was constrained. The universityhospital, perhaps, needs to reexamine its philoso-phy of uniformity in HR practices and centralizedHR. The community hospi tal , on the other hand,adapted to the employee needs faster, perhapsbecause of smaller size and greater tbru st on H Rin the past five years. H R seemed to revitalize thecommunity hospi tal .

The relationship between organizational strategyand HR was the second issue we examined in thestudy. It is interesting that the respondents fromboth hospitals appeared to fumble in providingcoberent comments on the overall strategy beingpursued by their respective hospitals. Th e chief clin-ical officer ofthe university hospital actually felt thatstrategic man agem ent was a mere academic exercisethat was not quite useful in practice. We felt that thesenior management of the two hospitals had notarticulated clearly the strategic objectives for tbeirrespective hospitals. In the absence of a clear strate-gic intent, all management actions, includingH R M , were unclear and inconsistent. Th e two hos-pitals may n ot be the excep tion. We believe that thelack of strategic management is pervasive in themajority of healthcare organizations. However, asthe competition between hospitals and other health-care organizations increases, there is likely to begreater attention paid to strategic managementissues. Tb us , hospitals need to crystallize their strate-gic objectives and identify H R practices that wo uldsuppo rt those objectives.

The respondents evinced the most interest on thethird issue of the interrelationship between cultureand HR. Interviewees from botb hospitals stressedthe importance of managing culture. The commu-nity hospital seemed to show a better grasp of the

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relationship between culture and HR than did theuniversity hospital, which can be attributed partlyto its simpler and smaller structure and partly to itsbetter understanding of the link between cultureand HR. The community hospital had seen a dra-matic turnaround in its culture because of the newHR director, who had been instrumental in imple-menting HR practices that transformed its culture.The culture of the university hospital was reportedto be bad but improving. We feel that both hospi-tals need to articulate values they want to infuse intheir employees and formulate HR practices thatwould achieve those values in their employees.

The respondents seemed to show only a modestunderstanding of competencies needed in manag-ing HR. HR has become a very complex functionover the years. This is especially true of healthcareorganizations. We felt that the senior managers ofboth hospitals need to have a better understandingof what H R entai ls and what type of H R managersare needed to perform that role. Th e C E O o f theuniversity hospital thought that the HR managersdid not need specialized training, which we feltwas a bit too simplistic if we consider th e evolutionof the HR function in the past 10 years. Suchunenlightened CEOs do not understand the cri t i -cal role that HR can play in service organizationsand fail to realize that HR in its new role is morecomplex than finance or accounting (Khatri2003) . The lack of advanced job-specific skills inHR professionals in the healthcare industry is oneofthe major reasons for limited change or scope ofHR in healthcare organizations (Khatri et al. 2006;Lawler and Mohrman 2003). Ulrich (1996) iden-tifies four main com petencies for H R m anagers:{a) knowing the business (i.e., understanding thecontribution and impact of HR pract ice on orga-nizational success), {b) having mastery of HR (i.e.,knowing the scope of HR practice, its impact onthe organization and staff performance, and show-ing specific competence in some or all aspects ofH R ) , (c ) acting as a change agent (i.e., managingculture and making organizational change hap-pen), an d {d ) having personal credibility (i.e.,building and sustaining trust with line managers,staff, and partners in the organization). Healthcareorganizations need to find HR managers andemployees who possess these competencies if theywish to use their HR department fully. Further,Khatri (2006) suggests a five-dimensional concep-tion of HR capability for harnessing HR in health-care o rganizations:

1. competent chief human resource ofiicer enl ightened top management,

2. competent HR employees,3. elevated status of HR,4 . HR department as a learning organizat

and5. integrated HR information system.The final issue we examined in the study was

relationship between HR and clinical outcomes. community hospital seemed to show a better appciation of the linkage. H R can affect clinical comes no t only by hiring the right people bu t alsoretaining good employees, training them, creatinlearning culture, andmost importantboosthe morale of their employees with proper HR tems. The respondents from the university hospwere less clear of th e overall impact of H R o n clinoutcomes. In the last two decades, an overwhelmamount of research evidence has emerged linkHRM practices with organizational performa(Arthur 1994; Carmeli and Schaubroeck 2005; Het al. 2001). The relationship between HRM organizational outcomes is even tighter in servorganizations because employees in services, unthose in manufacturing, come into direct conwith customers and have a direct impact on servquality (Bartel 2004; Korczynski 2002). Healthcorganizations must clearly identify what emplobehaviors improve service encounters with their ctomers and then institute HR practices and systthat encourage and reinforce behaviors enhancthose encounters (Goldstein 2003; West et al. 200

It seems proper to discuss briefly two issues were not the focus of the study but emerged in course of the study and are relevant. First, seveinterviewees stressed the importance of training improved clinical outcomes. The obvious implition is to focus on training programs for variemployees to improve clinical outcomes. Howevthe training programs may have limited impacemployee retention is not improved. The secoissue emerged as a result of our interview with CEO of the university health system. He mocconsultants by saying, "Having a great paradeconsultants in here . . . chaotic time to have a cture." He added, "It needs to be our programneeds to be us and our pride and our expectatiand our values." The CEO seems to concur wbludgeoning literature on HR suggesting that ornizations need to develop unique HR practices achieving competitive advantage rather than depe

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on outsourcing (Khatri 2006). The human factor iscentral to healthcare, yet its proper management hasremained beyond most healthcare organizations.

ACKNOWLEDGMENTThe authors are grateful to the reviewers of Hospital Topics

for their constructive comments on earher versions of themanuscript that were helpful in greatly improving the article.

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A p p e n d i xIn te rv ie w Qu e s t ion n a i re

Organizational Structure and Human Resources (HR)1. Is HR a separate departm ent or is it part of some other de partment, such as finance or adm inistration?2. Does the head of the HR department participate in executive and strategic planning meetings?3 . Have there been major changes in the HR department of your company in the past five years?Organizational Strategy and Human Resources (HR)1. Please describe to us the strategy of your company.2. Does HR play any significant role in implementing it?

3. What role is HR supposed to perform in your organization? Is the HR department able to perform the expected role?Organizational Culture and Human Resources (HR)

1. What is the culture of your organization (e.g., informal values, beliefs, norms held by organizational members)?2. Do you see any link between the culture of your organization and HR function? Or, are they disconnected and incon-sistent with each other?Compe tency Levels of Huma n Resources (HR) Managers1. Do you think that HR managers need any specialized skills or competencies? If so, what are those skills andcompetencies?

2. Do HR managers in your company possess those skills and competencies?Human Resources (HR) Strategy1. Does your company have any HR strategy? If so, what are its major elements?2. Does H R strategy or the lack of it affect the mana gem ent of HR function in any way? Please elaborate.3. Do you see any linkages among various HR activities in your company?Human Resources (HR) and Its Relationship with Quality of Patient Care and Medical Errors1. Does HR affect quality of patient care and medical errors in any significant manner?

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