UBIQUITY: Let's begin by having you tell us a little about the Studer Group and its services.
STUDER: Most people hire us to improve customer service, because we have a reputation of going in and working with companies that are very service-oriented. However, after they talk to us, they realize that they have to dig deeper than service, so we proceed to help them construct what I would call a very outcome-based culture that provides a good place for customers to receive service and employees to do good work.
UBIQUITY: Is your focus pretty much exclusively on the health industry?
STUDER: Yes, but just because we're so in demand. In 1999 I was given Inc. magazine's "Master of Business" award and was the only healthcare person ever to be given that title. Also, in December of next year, Wiley Publishing will publish a book I'm writing called "Sustaining Results: How to Hardwire Behavior in the Workplace" that's based on the success our tools and techniques have had in the healthcare field. So certainly there's a definitive crossover between healthcare and almost any business.
UBIQUITY: It's not too hard nowadays to find prominent people who think of information technology as the key to solving virtually all of the nation's healthcare problems. Do you think of it that way?
STUDER: No. I think it's an accelerator. And I think it can be part of a solution, but all too often the technology is poorly executed by the customer, so it fails to bring us the advantages promised. And who pays the price unfortunately is either the company that's selling the technology or the Chief Information Officer who's trying to implement it in an environment that can't execute.
UBIQUITY: And why do you think it's so often poorly executed?
STUDER: What we often find when we go into organizations is that the leaders who are to be utilizing and executing a new system don't have appropriate evaluation systems in place to hold them accountable for the desired outcomes so implementation slide down the priority list.
UBIQUITY: How do you help them create appropriate evaluation systems?
STUDER: Well, for example, if the new technology is supposed to allow them to improve their transaction rate, you put into their evaluation system more procedures per hour, which forces them to do a good job implementing the technology. When we go into organizations, we find that they're trying to implement technology but they haven't changed the leader's evaluation yet, so there's no real impetus for the leader to execute it wisely. So what's necessary is to get them to see the Chief Information Officer not as someone trying to get them to do something they don't really want to do, but as someone they actually want to seek out and ask how do we do this well? In other words, I think the number one problem is that they haven't changed their evaluation system.
UBIQUITY: And after that?
STUDER: Number two, many of the leaders who are now in the process of introducing a new system into their departments, or utilizing something new, have simply not had adequate training. We find that many managers have had less than eight hours a year of pure leadership training, and don't have the skill set or competencies they need, because they haven't created the right department culture. Many times they haven't even standardized their own operations, and that makes everything hard. When you put in a new technology or information system, but you're not standardized, you can never really maximize the tool or the technique.
UBIQUITY: Any other major leadership problems?
STUDER: Many leaders are not very good at dealing with low-performing or sub-par employees. Sub-par performers basically balk at change. They want to keep the culture the same, and you'll never maximize the implementation because a low performer can either slow down or sabotage what you're trying to accomplish with the new system.
UBIQUITY: How do you deal with that?
STUDER: I think we have the best prescriptive on this problem that has ever been developed. We call it our "high, middle, low" analysis, which shouldn't be confused with Jack Welch's bottom 10 or bottom 20. Basically you look at who are your high performers, and we provide characteristics that help people identify their high performers and to add metrics to evaluate them. You start by meeting with your high performers, because you want to make really sure they're with you, since they're the ones who are going to end up driving a lot of the execution of something new. However, the key element actually isn't your high performers but your middle performers, and it's the middle performers that become your tipping point for success. And low performers know exactly which middle performers they can wiggle on and can slow down. So after you meet with the high performers, have the leader meet with all of their middle performers, explain that they want to retain them, why they're good. And then you need to cover professional development, because what many employees want from their boss is the knowledge that you care about them as persons: not only do you meet with them and go over what they do well, but you're also committed to their further development.
UBIQUITY: So what typically happens?
STUDER: What we basically have done using this approach is we've moved the middle and high performers on the performance curve, so that the low performers become what I would call obvious outliers. And then you meet with them and, using a very scripted system, explain to them expectations required in order to move up or how they're going to end up being moved out if they don't perform. We call it the "up or out" conversations.
UBIQUITY: What's the bottom line?
STUDER: Four things can cause system implementation to bog down. One is not having a good evaluation system. A second is having a leader who's inadequately trained. A third is inconsistent leadership that leaves you without a standardized approach that facilitates consistent execution. A fourth is failing to deal with low performers, who sabotage new implementations right and left.
UBIQUITY: And you feel that, although you do most of your work nowadays with the health industry, this approach would work just as well in virtually any industry?
STUDER: Absolutely. I give Board of Director retreats all over the country, and most Directors I deal with are on healthcare boards but are not themselves healthcare professionals. And they basically come up right off the bat, and say my gosh, this is no different from my company. I agree with organizational theorists like James Collins and Larry Bossidy, who say that one of the top things you need to do in an organization is to have good selection. And selection is probably more crucial in the healthcare industry than any other industry because you're hiring people who can either help somebody live or could possibly kill someone.
UBIQUITY: How do you work on selection?
STUDER: When we go into organizations we find that they may have 50 different managers and 50 different selection processes. Yet the truth is that not only does information technology need to be standardized but so does the people part of the equation. Otherwise the people simply won't be able to maximize the execution, and they end up saying, "Well, we really didn't get what we thought we were going to get" and they blame the vendor instead of holding up the mirror and looking at their own failure of leadership.
UBIQUITY: You've emphasized the importance of metrics. Talk about that.
STUDER: We have what we call an economic worksheet, or an economic return on investment sheet. For example, we were at a 26,000-employee organization yesterday that has a 17 percent employee turnover, and we figured out how much every percentage of turnover costs them over a certain level. If you have too many vacancies, you're going to have overtime, or you're either going to outsource to someone who is probably more expensive, or bring in an agency-type worker, who's going to come in and charge more because you're paying for both them and the agency. And in many organizations we go into, just that alone is a huge number. This one yesterday was such that if we could reduce their turnover four percent, it would save them $10 million over a four-year period.
UBIQUITY: Then cost is the essence of the problem?
STUDER: Cost and quality. We also look at how they measure quality, and we show how turnover impacts quality. Then look at service. Service is many times what I would call rework, and that again ties to certain lynchpins. We give them a list of about 30 or 40 economic metrics, allowing them to put down where they're at now and then pick the five or six key metrics they're looking to move. We talk about where we could help them improve, and put a dollar number on it. And then we probably do something else, which is very unique. We offer a money-back guarantee of the full amount.
UBIQUITY: How does that work?
STUDER: Well, if we tell a company we're going to do such-and-such, then any time throughout the agreement the CEO can say to us, "You know, we don't think you were worth that much money, we only think you're worth this much money." So if they've paid us the entire amount, then we would refund them the amount they ask for, and if they haven't paid us the whole amount then we would negotiate with them how much they really owe us. We're probably one of the only companies that do this.
UBIQUITY: And you've lived to tell about it?
STUDER: Yes. When I was a CEO of a pretty large company, Baptist Hospital in Pensacola, Florida, people would come in promise me this or that, but then when I asked them to put skin on the table, they either didn't want to do that or they put so many caveats into their promises that I realized we'd be spending most of our time with them blaming us or us blaming them or both of us taking credit. So instead of helping us work in partnership, it would actually divide us. That's why we basically put the agreement at the CEO's discretion. The CEO and the company are my customer, and you shouldn't argue with your customer. If somebody says the food is no good, you're the person eating it, the food is no good.
UBIQUITY: But your money-back guarantee hasn't caused too much grief for you?
STUDER: Not at all. It has only been used one time in our history, and now we know where we're vulnerable. That vulnerability is when a CEO brings us in and then departs let's say within the first two or three months of the agreement. Normally, we're not successful by that time, because the client hasn't yet put in the key elements necessary for success.
UBIQUITY: In what other ways do you think you're different from other consulting companies?
STUDER: I think we take more of an operational viewpoint, versus let's say a human resource viewpoint. Our evaluation system isn't based on behaviors, it's based on outcomes, and we're going to hold people accountable for the outcomes produced by their behaviors. When we go into most organizations, we find their evaluation system is actually a little weak and a little unfocused, so we help them deal with root causes rather than with symptoms. For example, a healthcare organization we worked with was appalled because of various safety issues and quality issues in its organization, and the executives were mystified and wanted to know why didn't the employees say something? How did this happen? Well, we looked at their numbers and saw that they had almost 20 percent turnover, which means that one in every five employees is new every year. And they had a morale rating, as measured by their own survey, of just 54 percent. Now you can talk about the fact that an employee used the wrong cleaning liquid on something, but the key question is what's causing the turnover and what's causing the poor morale. Because unless you deal with those root causes, you're just going to be dealing with symptoms.
UBIQUITY: Could you describe in general terms one of your recent clients? Just pick one.
STUDER: Okay, I've got one in mind a large Jewish hospital system with probably around 8,000 employees; it's now merging with a Catholic hospital system. Everyone's calling the merger a mixed marriage.
UBIQUITY: How do you help?
STUDER: Not by telling them "Here's how to do it," but by bringing them our tools and techniques. The first step is what we call a model of development, which is done by sitting down with the senior executive team and going over very specific measurable outcomes.
UBIQUITY: Such as?
STUDER: Such as: What should your vacancy rate be? What should your turnover be? Should there be diversion in your ER? How do we lower it? What should your quality indicators be? What should your patient satisfaction be? We pick those measures because those are things that people can all agree on. They can all agree with the goal of creating a better place for customers and a better place for employees which in turn tie into better quality, better finance. As far as I'm concerned, if there's only two things you do, number one is make sure you put in a good evaluation system for your managers (one that's objective and weighted, because weighting gives you your prioritization). And number two, make sure you give the leaders enough development and enough skill set to be successful.
UBIQUITY: You mentioned turnover. Why is turnover so important?
STUDER: It's always a sign of serious business problems. Interestingly, the Restaurant Association can show you statistics that turnover creates tips, and that the less turnover you have, the more fluid the service, and therefore the more tips people give. In retail, turnover impacts same-store sales because if you have too much turnover, then the people aren't going to know the product or the supplies. So we try to help our clients identify what are the key leverage points in their organization. And eventually it always comes down to the evaluation system: aligning the goals; the training to align the skill set; and then behavior-changes to align the people. And that's why you end up dealing with low performers eventually, because many of them have been enabled to hide in the organization. This kind of project makes them more transparent.
UBIQUITY: As your typical project proceeds, does the CEO of the client company typically fade away?
STUDER: No, the CEOs stay very involved. And there are two things a CEO should never delegate: the selection of the organization's talent and the development of the organization's talent. Sort of like the recent World Series. One of the things I guarantee you is that Ozzie Guillen of the White Sox and Phil Garner of the Astros had a lot of input on who ends up on their 25-man rosters, and what type of development they get throughout the year.
UBIQUITY: It's clear what's on the back of your mind which is only to be expected, since you've owned a baseball team in Pensacola for the last five years. Tell us a little about that. What caused you to buy a baseball team?
STUDER: My main reason was commitment to the community. When I was president of a large employer, Baptist Hospital, I had a lot of impact, not through things like Rotary Club or the Chamber of Commerce but through interactions with the public. When you have an ER with 57,000 visits, 15,000 inpatient visits, hundreds of thousands of output visits, and a couple of thousand employees, you know you're having a huge community impact. And when I started my own company, I began having a great community impact outside of Pensacola but I wasn't sure I was having the community impact I wanted to have inside Pensacola. You know, I started out as a special education teacher, so making a difference has been important to me. And I saw the Pensacola Pelicans as a way to really bring back what I think is some wholesome family entertainment for the community.
UBIQUITY: And how does that work as a business?
STUDER: Well, I think it works like any business. You know you've got to have attendance, because attendance drives your economic indicators. And you have to have the right product, and the product includes the venue to play in. And of course our future is still uncertain because it's very dependent on a new park in downtown Pensacola.
UBIQUITY: Can you summarize the situation?
STUDER: It's a private/public partnership, with a minimum cost of about $70 million. It's pretty much a 50-50 split, which is pretty unheard of because usually developments like this are more public. Probably the most unique thing about it is that while it includes residential living, offices, and retail in addition to a multiuse park, museum and education for the University of West Florida the fact that it's being developed by a not-for-profit entity called Community Maritime Park Partners means that there's no profit motive. What the outside experts we've hired from around the country say they're most shocked about is that unlike large projects like this in other cities are normally done by a developer intent on making a profit, whereas this one has absolutely everything returning back to the community.
UBIQUITY: That's from the business point of view. What about from the baseball point of view? How are the Pelicans doing?
STUDER: We're doing well. We just moved into a new league, called the American Association, which is probably the premier independent baseball league in the country. Independent teams are basically teams that are unaffiliated with the major league organizations, which allows you a lot more freedom in operating the team talent-wise.
UBIQUITY: Is there any chance of getting the games covered by local television?
STUDER: I haven't approached that yet, but I plan to, because I think it would be a huge win. I think 50 percent of the fans want to watch the game and 50 percent want to be seen at the park. So TV coverage would be a huge plus.
UBIQUITY: Let's end now on a technology note. Does the Studer Group plan any special new emphasis on technology?
STUDER: Very much so, and we've just come out with various special-purpose products we're real excited about. One example is an automated system of calls to discharged patients. Twenty percent of patients experience an adverse event after they leave a hospital yet many times we don't call them to check on their post-discharge status. So we've created a system that will not only help nurses call patients back but also ask them key clinical questions to help eliminate or reduce readmission back to the hospital or an adverse event. We're very excited about that. Progress is made one solution at a time.
UBIQUITY: Where should people go to get in touch with you?
STUDER: Our Web site is http://studergroup.com/.
Source: Ubiquity Volume 6, Issue 46 (December 14-20, 2005)