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Research / Engaged In What? (Part 5) - Cleveland Clinic Case Study
by Dr. Theresa Welbourne, PhD
Cleveland Clinic is ranked as one of the top hospitals in America by U.S. News and World Report in their 2013 report. In December, 2013 Cleveland Clinic had 43,890 employees who are spread out in multiple locations including Ohio (with 16 full service health centers), Nevada, Florida (within the US), Canada and Abu Dhabi. Cleveland Clinic is a growing organization. Their success was greatly supported by their employee engagement work that began in 2008. A key part of that initiative was an innovative, multi-tiered recognition program that was part of the overall rewards strategy. This brief case study is a review of how their reward and incentive programs were strategically used to align employee engagement with their organizational goals.
A key lesson learned from using the role-based approach to understanding engagement is that behavioral choices need to be prioritized to lead to desired outcomes. The Cleveland Case study is exemplary in showing how an organization chooses the behaviors that engagement should target and then aligning mechanisms under the control of both headquarters and managers to not just send the message about the behaviors needed but also to consistently reinforce the message. The link to key behaviors is what led to the Cleveland Clinic’s success in driving higher organizational performance.
The hospital is a massive structure that resembles a small city sprawling over 167 acres and includes 46 buildings. In the core of the facility one finds a hotel. This is where I (Theresa) met both Marilyn and Matthew. As we ventured to other parts of the hospital we used wide covered skyways (bridges over streets) that connect hotels to restaurants to stores to various hospital buildings. The buildings are held together by the buzz and energy of employees, patients, art and visitors. The art – it’s everywhere, and it’s always changing. We saw numerous places where volunteers were changing the art. Colors are everywhere; interactive kiosks were installed in high traffic areas which include a talking avatar named “Eve” that responds to questions. To ensure patients do not get lost, the kiosks also allow users to print directions, send directions to their phones, and estimate walking times. Additionally, Cleveland Clinic is developing a mobile application for directions around its main campus. As you move from building to building, service centers in various forms are everywhere. You run into welcome stations with “Redcoats,” caregivers in bright, red coats who offer assistance to any patient or visitor in need. We also found a center for international patients who need language assistance with interpreter services for over 180 languages. Cleveland Clinic is a modern, technology-driven, people savvy organization. If I were a patient there, I would feel confident entering into the mosaic of knowledge and caring exhibited by the people and the place.
Cleveland Clinic embraced employee engagement in 2008 as part of a major change initiative designed to transform how every employee delivered patient care. In fact, a hallmark of their change is an initiative whereby every employee was focused on becoming a caregiver. The tag line used and currently being used is: “we are all caregivers” – the identity is not just for doctors and nurses but for every single employee. The overall change to building a more “patientcentric delivery model” started in 2006 with expansion (more buildings, people), restructuring, and the appointment of a chief patient experience officer in 2007.
Cleveland Clinic used the Gallup Q12 employee survey to establish a baseline set of employee engagement metrics. At the same time, while rolling out the “we are all caregivers” initiative, the team also explored leadership education. The group taught and built a model based on service leadership, which was a variant of servant leadership (based on book by Robert K. Greenleaf). These initiatives were all to complement the Cleveland Clinic’s traditional mission, vision and values, with the motto being “Patients First: To provide better care of the sick, investigation into their problems, and further education for those who serve.”
A new vision statement was “striving to be the world’s leader in patient experience, clinical outcomes, research and education.” Lastly, new values were adopted, adding “compassion and integrity” to the list that already included quality, innovation, teamwork and service.
Cleveland Clinic took a total rewards approach to their plan. The organization assured they had comprehensive and adequate health care, including wellness programs, pension / investment, tuition reimbursement, adoption help, an Employee Hardship Fund in which employees apply for financial support based on emergency needs; home purchase assistance; employee discounts for purchases such as computers, sporting and theatre event tickets, cell phones services and other local venues (employees saved over $2 million dollars annually on discount purchase programs). Lastly, they adjusted jobs to assure that they were paid at current market levels. It was on top of this solid foundation that they added their Caregiver Celebrations program, which started in 2010.
The Caregiver Celebrations initiative was the first enterprise-wide rewards and recognition program for the organization. The program went through extensive planning and development. The individuals who created the program were influenced by research and new writing on the topic, including research done by Towers Watson and Gallup.
This initiative was rolled out to 43,000 employees and customized to support Cleveland Clinic’s values. The online program had several tiers, which allowed participation from managers, doctors, patients and all employees, each of whom had a personal Caregiver Celebrations recognition website. Below is a summary of the key components of their program.
1. Appreciation Award – This is a non-monetary award, which is administered peer to peer, by manager or physician to employee or from patient to employee to say “thanks” to a caregiver for a job well done. The purpose is to reinforce behaviors that support Cleveland Clinic values and to build a patient-centric culture.
2. Honors Award – This is individual and team recognition by managers for outstanding actions and performance that leverage the Cleveland Clinic values and patients first culture. The average award is $25 per employee per year. Recognition gift denominations range from $10 to $100. Since Cleveland Clinic wants the caregiver to receive the full value of the award, the value is adjusted upward or “grossed up,” which results in the caregiver receiving the full value of the award after taxes. The overall program awards can be approved or denied by the institutes, divisions and hospitals. This level of flexibility was important in creating recognition plans that support the goals of the business as the organization changed. The ability to utilize a fully automated, global system brought more people into the program. Rather than creating their own recognition systems in pockets throughout the organization, institute leaders could take advantage of the global recognition system and make decisions on individual and team awards in their own institutes. The result was building the core values and culture, through financial and tangible symbols of achievement and institute participation.
3. Excellence Award – This award recognizes individuals or teams that demonstrate exceptional effort or initiative resulting in a significant impact on Cleveland Clinic’s patients, business, innovation, etc. A total of 4% of employees overall can be awarded a monetary gift certificate or cash award. There is a quarterly nomination process, and the goal is to recognize significant achievements. In addition to the monetary awards, recipients receive a symbolic desktop award that is presented in front of peers.
4. Caregiver Award – This is Cleveland Clinic’s enterprise award, presented to those individuals or teams that demonstrate the highest achievement, initiative, or behaviors resulting in the greatest positive impact on the organization, and who show the upmost support of mission, vision, and values. A total of 200 finalists lead to 50 recipients. Recognition includes a symbolic desktop award and monetary award presented at a gala awards banquet. Individual recipients of this award receive $2,000 and teams split $2,000 amongst their members. One individual and team are chosen annually for the top CEO Award, which is the “best of the best.” The CEO individual winner receives $10,000 and the CEO winning team receives $10,000 to split amongst its members.
From 2008 to 2013, the institution’s scores on Gallup’s employee engagement question regarding “received recognition” have increased (from 3.24 to 3.95; the highest increase in the 12 Gallup categories). Perhaps the better gauge of success is the degree to which the program is being used. From 2010 to 2013 the average number of awards per month has moved from 6.44 to 18.42. Since inception more than 575,000 awards were generated (see Figure 3).
We speculate that the most powerful part of Cleveland Clinic’s reward and recognition process is the intentional linkage to core values. They went beyond engagement per se to develop a strategy focusing on the ‘engaged in what’ question, with the answer being ‘engaged in patient care.’ The result is success in improving patient care and overall engagement. Cleveland Clinic’s overall engagement score has continually improved from 3.80 in 2008 to 4.25 in 2013 (See Figure 4).
Role-Based Lens: Cleveland Clinic provides an example of the role-based work, combined with employee engagement, can lead to achieving firm-level success. One can analyze their overall rewards strategy as follows, using the role-based lens:
Core Job Role – Cleveland Clinic shows that the core job is important through their overall market-level base salary and benefits programs. Health insurance, retirement and other core job benefits (given to people when they are employed) provide a signal that they are willing to pay what it takes to bring in top talent. They provide benefits designed to keep those individuals. The package they provide sends a message that the organization wants to create a high quality compensation package to retain the best people. Their base package is designed to incent, be fair and keep people working at their best in their core job roles.
Career Role – The tuition reimbursement program signals that learning new skills is important. The Cleveland Clinic’s tuition reimbursement program is one of the best in the market, according to benchmark studies conducted by the organization. Cleveland Clinic’s mission emphasizes the importance of “further education of those who serve.” Although the Caregiver Celebrations rewards program focuses on recognizing those who demonstrate the organizations’ values, tuition reimbursement, especially for key areas like nursing, remains integral for supporting the mission.
Team Member Role – The recognition system allows for nominations of both individuals and teams, supporting the importance of being a team member. It’s very clear from reviewing the descriptions of the programs that the plan was very intentionally designed to reward both individuals and teams, and this focus came out of the fact that one of the core values is teamwork.
Entrepreneur Or Innovator Role – Innovation also is a core value, and they have found that individuals who are nominated for recognition often are done so based on their ideas or innovations that have been used. The link to the mission and values would generate more reward for innovations targeted at improving the patient experience.
Organization-Member Role – this role involves doing things important for the company. The emphasis on “everyone being a caregiver” brings the organization-member role front and center. Employees think about being part of one organization -all with the same daily goal. This is a very powerful message that is not only delivered but reinforced by actions and the rewards program.
We applaud the employee engagement efforts at Cleveland Clinic. Their vision in building a recognition plan linked to specific goals led to the strong support for the program and for the wins. We were particularly encouraged by the plans access to everyone. In an organization with over 43,000 employees, it’s difficult to predict the future. By providing flexibility for managers, and even patients, to use recognition to reinforce the organization’s goals, their recognition strategies can be both strategic and tactical, and we think that’s a key for success.
Cleveland Clinic did a lot very well, and we recognize them as an exemplary organization in using recognition and rewards to answer the “Engaged In What?” question.
Figure 5 illustrates the model we propose using to link engagement to behavioral targets of engagement, which then would lead to attaining organizational goals. On the left side of the model are two categories of rewards. The top left box is corporate-wide rewards (box 1), which are set up by organizations to attract and retain people in specific jobs. Programs such as base compensation and benefits, administered universally to all employees for joining, are in this bucket (see Welbourne et. al., 1998 for a more complete description of the various compensation programs in each role). Using Cleveland Clinic as an example, one can see how this model works. Marketbased base compensation and benefits bring high quality people to Cleveland Clinic. But alone, these corporate-wide rewards are not enough. They do not send signals about what non-core job role behaviors are important or what is uniquely expected from employees at Cleveland Clinic. Organizations differentiate themselves in markets not by paying more for base pay but by signaling and rewarding the behaviors that make their firm unique in the market.
Defining which non-core job roles are important leads to decisions that can be used to shape a recognition program. Other types of rewards, noted in box 2 on the left side of Figure 2, are used to incent, reward, communicate and differentiate. The programs that signal what non-core job behaviors are important are the ones that provide competitive advantage in the market. There are numerous programs that have been used to signal what, beyond the core job, the firm values. These various rewards and recognition plans vary in their cost to administer, the degree to which they are perceived as fair, the expense associated with them and the flexibility in delivering to meet ever-changing strategic and tactical goals. We saw at Cleveland Clinic a directive to invest in recognition plans. Given the cost conscious and changing nature of health care, this is not surprising. It would be difficult to set up adequate team-based bonus plans, profit sharing or gain sharing in a world where government regulation is changing the rules dramatically. The use of recognition plans not only allowed Cleveland Clinic to roll out a program that met their budget constraints, but it also provided flexibility.
As can be seen in the center circle (#4), agile organizations, or firms that build capability for change, are better served when their rewards and/or recognition systems can be administered by managers. Consider the difference in the first level recognition plan at Cleveland Clinic compared to a standard gain sharing plan. Gain sharing requires much consideration about what goes into the formula; it is scrutinized by all stakeholders. In some cases, organizations pay out gain sharing bonuses when the firm is not profitable. These larger groupbased rewards systems can be powerful, but they are difficult to manage, and they have very little flexibility. Changing a gain sharing plan formula can lead to negative outcomes as employees think the plan is being altered to avoid paying out a bonus. However, recognition systems come with much more flexibility. When managers can “own” the plan, it means they can reward what’s neede today vs. what was determined important by leadership last year. The ability to be flexible with the recognition plan means managers can provide recognition for innovator role-based behaviors in the first quarter and teambased behaviors in the second quarter — IF that is what’s needed to support the firm’s needs. To summarize the discussion of the first two columns in Figure 2, corporate-wide, all employee rewards plans support core-job behaviors. However, other types of rewards and recognition systems reinforce not only the core job but the non-core job roles. When these plans are created to be flexible, as is the case with recognition systems, then managers can signal which roles are important, and they also can communicate effectively how the importance of these roles change.
The ability to signal change is critical because employees cannot be engaged in everything equally. The last column, shown as a triangle and #6, shows what we call the big idea. One may argue it’s not really so dramatic of a new concept; however, when we communicate this to managers, we do get many an “aha” moment. Thus, we’re going out on a limb and calling it a big idea. When you raise the importance of one role, it means the others are less important.
The key message here is that employees cannot be engaged in everything. The success of any employee engagement program will be the degree to which employees know which behaviors are critical for them to be engaged in performing. Engaging in all will result in burnout and frustration.
The importance of the various roles for firm performance can change based on new customer demands, competition or economic conditions. These environmental changes pose problems in organizations trying to manage direction or alignment of engagement with roles. We suggest that giving managers the flexibility to administer recognition systems that can reinforce changing priorities will foster the type of engagement needed to continually drive high performance.
Being able to manage priorities is critical because, as noted earlier, employees cannot do more of everything. Choices need to be made, and those decisions may need to be flexible. Informal rewards and recognition plans are the options that allow managers to manage the “engaged in what” question.
The Incentive Research Foundation’s Industry Outlook for 2023: Merchandise, Gift Cards and Event Gifting reports an optimistic outlook for 2023 despite continuing challenges to the global economy. With a critical focus on attracting and retaining talent, businesses consider non-cash incentive programs to be a valuable tool to motivate a changing workforce.
IRF President Stephanie Harris and IRF Chief Research Adviser Rick Garlick present this useful analysis of how incentive, rewards and recognition programs are being designed and budgeted for 2021.