Four Ways to Improve Retention and Decrease Turnover for Your Healthcare Staff, Part I

Blog Posts  |  07 September 2023

Written by: Auren Weinberg M.D., M.B.A. and Cheryl Reifsnyder, PhD

According to polling data from healthcare advocacy group MGMA, staffing tops the healthcare industry’s list of challenges in 2023. And this is not a new problem. Healthcare has been battling an epidemic of burnout (which is associated with a 200% increase in medical errors) even before the heavy impact of the COVID-19 pandemic. When the pandemic hit, though, it require a large percentage of the healthcare workforce to regularly risk their lives for patient care—resulting in 35% to 54% of U.S. nurses and physicians with burnout symptoms.

High employee turnover creates both a financial and a resource burden for healthcare organizations. It generates costs for recruiting, hiring, and training new employees, as well as the expense of temporarily filling staffing gaps with expensive contract workers. Higher turnover often reduces productivity among the remaining staff as well, as managers focus on hiring and bringing new team members up to speed. Another significant cost is the drain on employee morale as those remaining have to work harder to fill staffing gaps—often for less pay than contract workers hired to provide temporary coverage. It can also affect patients, who may observe the impact of poor patient-to-staff ratios, leading to potentially irreversible reputational damage.

On the flip side, limiting staff turnover has numerous benefits:

  1. Retain expertise: Keeping more experienced staff enables more efficient processes, translating into better cash flow, higher revenue, and the ability to work through problems more efficiently.

  2. Avoid new hire costs: Hiring a front-line staff person can cost up to 50% of the position’s annual salary when you consider costs for advertising, recruiting, interviews, testing, and so on.

  3. Preserve morale: Presumably, there is some cause behind high levels of staff turnover, such as high stress, low wages, or poor leadership—all of which can cause morale to suffer. Low morale, in turn, will exacerbate staff retention issues. It can also negatively affect staff productivity, which can have a significant financial impact.

  4. Avoid negative customer service impacts: Unhappy staff may rub off on patients, while constantly replacing staff may lead to workers with decreased levels of expertise, which can negatively affect patient experiences.

Hiring and retaining top-quality candidates in healthcare can present a significant challenge. The healthcare industry needs effective, efficient retention strategies to deal with the combined obstacles of talent shortages, high turnover rates, and high competition for top candidates. In this 2-article series, we look at 4 strategies to help you more effectively retain your current staff and reduce employee turnover at your practice.

#1. Be willing to pay more for the right team member

Business leaders often worry that raising the minimum wage will financially harm their business, but research suggests otherwise.

Researchers at Berkeley showed that the low wages paid to healthcare support workers, direct care workers, and healthcare service workers in California have resulted in a struggle for these workers to meet their basic needs. Substandard wages have significantly contributed to the ongoing challenge of maintaining sufficient staffing in California’s healthcare sector. The currently proposed wage increase will increase the affected workers’ wages by about 30%, on average, but will only lead to an estimated 3% increase in operating costs for area healthcare facilities. The researchers suggest that there is a strong established correlation between higher wages, reduced turnover rates, and improved staffing levels.

A 2020 review of the relationship between job satisfaction, wages, and employee retention in the UK National Health Service (NHS) labor force found that poor pay negatively impacted nurses’ job satisfaction, and poor job satisfaction negatively impacted nurses’ job retention. Several previous studies also highlighted the connection between poor pay and nurses’ decreased job satisfaction. One found that the majority of nurses did not feel adequately compensated for the work they were doing. Another found that nurses were more likely to stay in the nursing profession when they were satisfied with their pay.

However, this study also found that there were limits to how much increased pay could improve staff retention. In the case of the NHS workers, a wage increase on its own was deemed unlikely to eliminate the high turnover rate because the nurses had other concerns as well, including staff shortages and the associated increased pressure on the remaining workers; poor job satisfaction; lack of feeling valued; and a lack of recognition. Researchers have consistently found that increased pay cannot compensate for poor working conditions, such as discrimination or high workload; however, it can significantly affect turnover.

#2. Rethink leadership styles and methods

Effective leadership is central to helping shape a healthcare organization’s working culture. There are numerous different leadership styles healthcare leaders can use, giving them different ways to motivate, communicate with, and relate to the workers reporting to them. Some of these styles are supportive in nature, whereas others can be actively destructive to the working environment. As a result, different leadership styles can affect the staff’s performance as well as the performance metrics of the healthcare system as a whole.

Studies have also shown a relationship between leadership styles and the quality of care delivered. Effective leadership styles are positively associated with:

  • Increased patient satisfaction
  • Lower rates of adverse health events
  • Improvement in retaining and supporting staff—which can indirectly affect mortality rates

Supportive leadership styles

Several studies have found that different leadership styles correlate with clear positive or negative effects on employee turnover rates. A 2021 review in the International Journal of Environmental Research and Public Health looked at the relationship between different leadership styles and nurses’ job satisfaction, which is directly correlated with job retention. Another review, in the International Journal of Nursing Practice in 2022, analyzed the relationship between leadership styles and nurses’ work-related well-being—which has also been correlated with job retention rates. Both studies found that the majority of leadership styles had a significant impact on nurses’ rates of job turnover, either positive or negative.

Supportive leadership styles, or those with a positive impact on employee turnover, go by a number of different names, such as Transformational, Resonant, Servant, and Authentic leadership styles. These supportive leadership styles exhibited several common characteristics:

  • Leaders focused on teaching and coaching employees, helping them to develop their strengths.
  • These leaders focused on inspiring employees.
  • These leaders treated employees as individuals and emphasized consideration of their viewpoints.

Supportive leadership styles were clearly correlated with improved job satisfaction for nurses, a trait shown in other studies to correlate with decreased employee turnover.

Destructive leadership styles

Destructive leadership styles, or those that negatively affected employee turnover rates, included Passive-avoidant, Laissez-faire, and Autocratic leadership styles. While these vary in some respects, they also have several traits in common:

  • Destructive-style leaders were characterized by a lack of leadership—whenever possible, they avoided responsibility, avoid confrontations, and avoid making decisions.
  • As these leaders did not usually provide clear direction, their employees were forced to set their own goals and establish their own decision-making processes.

These leadership styles also seemed to emphasize the nurse leaders’ selfishness and poor treatment of their staff.

Researchers concluded that either too much or too little communication from nurses’ supervisors negatively impacted staff and could cause them to feel unmotivated or neglected. Destructive leadership styles were also associated with increased costs, increased employee turnover, and decreased employee performance.

Transactional leadership style

Only one leadership style was ambiguous in its effects, effective in some cases but negatively impacting staff in others: the Transactional leadership style. This leadership style was characterized by leaders who offered “contingent rewards,” such as a promotion or career advancement, as recognition for achieving goals or performing well; usually, transactional-style leaders also included penalties for underperformance. In one study, researchers found no significant correlation between this leadership style and nurses’ job turnover rates in 37% of cases, a negative effect on job turnover in 13% of cases, and, in 50% of cases, they observed a positive impact on job turnover.

In another study, researchers labeled the Transactional leadership style as one of the “supportive” leadership styles. With its focus on employee roles and performance-based reward systems, Transactional leadership may not encourage creativity or problem-solving in employees. However, it can still be effective for focusing on specific tasks or addressing limited-scope problems.

However, other “supportive” leadership styles, such as the Transformational, Resonant, Servant, and Authentic styles, have a more consistent correlation with higher levels of staff well-being and lower levels of staff turnover.

Improving employee retention and decreasing staff turnover, Part II

Join us again next week to learn 2 additional strategies for helping tackle healthcare’s escalating staffing challenges—as well as a curated collection of tools to help you decrease stress for your workers.

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