No Layoffs Philosophy

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One of the toughest times in my health care career came just a few weeks after I took over the CEO post at a Los Angeles area hospital in the midst of a financial crisis that threatened its survival.

The situation was so severe that slashing costs and finding new sources of revenue were the only options available. That meant I had to lay off employees for the first time.

It was a painful experience not just for the employees who lost their jobs but for me as well. And it could have been avoided if the hospital’s previous management hadn’t failed to adjust to changing Medicare reimbursements by reducing costs and building cost-containment systems.

The employees who had counted on the organization to support them were paying a huge price for something in which they had no blame.

At the time, I thought, I never want to have to do this again.

When I arrived at Scripps Health 15 years ago, I once again faced the task of turning around an organization in financial crisis. I vowed to do it in a way that created a secure environment for our people. Fortunately, I had more time to act which gave me more options beyond job cuts.

That was the beginning of our no layoffs policy at Scripps. This might seem like a radical and risky pledge, especially in a sluggish economy and a period of unpredictable change in the health care industry.

Here’s how we’ve done it:

  • Since this is a philosophy and not a formal policy, we can still react to abrupt, catastrophic changes in our market that might require extreme measures.
  • Our workers understand that they might have to move to another location or learn new skills in order to stay at Scripps if conditions eliminate their current job.

*We make job security a basic consideration when forging strategic decisions.

  • We fill job vacancies with existing Scripps employees whenever possible.
  • Through our Scripps Career Resource Center, employees facing a job transition are put first in line for suitable open positions, receive necessary retraining and can stay in the center for up to 90 days while receiving full pay.

We’ve seen great results from these efforts.

Since its creation in 2002, the Career Resource Center has assisted more than 950 employees, placing more than 90 percent in new jobs here or elsewhere. Our employee turnover rate stands at 9.7 percent today, better than the industry average of 16.5 percent and far below the Scripps rate of 19.8 percent in 1999. And we ranked No. 24 this year on Fortune magazine’s “100 Best Companies to Work For” list with an index score of 85, up significantly from a score of 58 in 2002.

We need our employees to help us create the change that has to happen if we are to succeed. They can’t very well focus on finding ways to cut costs if they’re afraid their own job could be one of those cuts. But if they feel that their job is safe, they can be part of the team pulling together to help us identify ways to work smarter. And that team effort is working.

Since the fall of 2010, we – all of us here — have achieved some $320 million in savings for the organization, with more on the way.