St. Mary’s Hospital Case Study
University Dr. Amy
, St. Mary’s hospital, the third-largest hospital in a North Western city, has 1,150
employees working for it. These employees are entirely nonunion and the hospital has never
experienced a lay off before. Currently due to competition, the 2008-2009 economic recession as
well as changes in the industry the hospital has run into financial challenges with the projected
deficit for the coming year being $ 3,865,000. The board of directors has recommended a 10%
lay off as the way to overcome this crisis. The recommended lay off will enable the hospital to
save up to $ 3 million (Nkomo, Fottler & McAfee, 2011). The CEO and director of human
resources are very cautious with the plan for the layoff will have several impacts.
The main human resource problem that St. Mary’s hospital is facing is the lack of
elaborate criteria for executing an employee lay-off. Due to the looming financial crisis, the
hospital is considering a staff layoff for the first time since its inception. (Nkomo, Fottler &
McAfee (2011) note however since it has never been through a lay off in the past there is no
existing lay off criteria that is acceptable by the employees. The layoff will have a bad effect on
the Human resource situation in the company and both the CEO and the human resource director
are aware of this fact. As Schnackenberg, & Tomlinson (2014) notes trust and sound
communication is vital in any organization. Employee layoffs if not well planned and executed
can lead to a decline in competitiveness and morale in the remaining team. The human resource
director thus needs to be very careful with the layoff. The minor problem that the hospital is
facing in this context is the financial crisis, the occurrence which is necessitating the layoff.
The main cause of the problem that St. Mary’s Hospital is facing is an effective
performance appraisal system that leads to inadequate appraisal. If the hospital had a well-
developed performance appraisal system it would have been relatively easy to conduct the layoff.
It is stated in the case study that the current performance appraisal system is ineffective since it
uses a traditional checklist rating scale with a summary rating (Nkomo, Fottler & McAfee,
University Dr. Amy
, St. Mary’s hospital, the third-largest hospital in a North Western city, has 1,150
employees working for it. These employees are entirely nonunion and the hospital has never
experienced a lay off before. Currently due to competition, the 2008-2009 economic recession as
well as changes in the industry the hospital has run into financial challenges with the projected
deficit for the coming year being $ 3,865,000. The board of directors has recommended a 10%
lay off as the way to overcome this crisis. The recommended lay off will enable the hospital to
save up to $ 3 million (Nkomo, Fottler & McAfee, 2011). The CEO and director of human
resources are very cautious with the plan for the layoff will have several impacts.
The main human resource problem that St. Mary’s hospital is facing is the lack of
elaborate criteria for executing an employee lay-off. Due to the looming financial crisis, the
hospital is considering a staff layoff for the first time since its inception. (Nkomo, Fottler &
McAfee (2011) note however since it has never been through a lay off in the past there is no
existing lay off criteria that is acceptable by the employees. The layoff will have a bad effect on
the Human resource situation in the company and both the CEO and the human resource director
are aware of this fact. As Schnackenberg, & Tomlinson (2014) notes trust and sound
communication is vital in any organization. Employee layoffs if not well planned and executed
can lead to a decline in competitiveness and morale in the remaining team. The human resource
director thus needs to be very careful with the layoff. The minor problem that the hospital is
facing in this context is the financial crisis, the occurrence which is necessitating the layoff.
The main cause of the problem that St. Mary’s Hospital is facing is an effective
performance appraisal system that leads to inadequate appraisal. If the hospital had a well-
developed performance appraisal system it would have been relatively easy to conduct the layoff.
It is stated in the case study that the current performance appraisal system is ineffective since it
uses a traditional checklist rating scale with a summary rating (Nkomo, Fottler & McAfee,
