Although it's nearly a cliché , it's hard to criticize the principle that the best way to satisfy your customers is to satisfy your employees. Still, it's one thing to advocate such a policy in a company and quite another to make it a reality. Quinton Studer, president of Baptist Hospital, a 5,000-employee facility in Pensacola, Fla., has done both. When Studer arrived, Baptist's admissions were flat, and patient satisfaction, as measured by a national survey, was slightly below average. Studer has used rigorous goal-setting and measurement methods to make the hospital more effective at satisfying both its employees and its patients.

Studer went to Pensacola in June 1996, after a stint as senior vice president at Holy Cross Hospital in Chicago. He spent the next several years at Baptist developing a management model based on his previous experience as a special education teacher. "Maximizing an organization's ability is similar to maximizing a child's potential," Studer says. "The first step is to diagnose the situation and then set achievable goals. The higher the goals, the closer the student or organization comes to reaching full potential. Every 90 days the teacher does an individual education plan to ensure that all resources directed to the child are aligned with the goals. And at the end of a year, old goals are reassessed and new ones are set."

Studer believes that measurement, as well as goal setting, was key to the improvements Baptist achieved. "We decided we had to have a measurable service goal," he says. "I believe you have to measure what's important to you, and that you have to have some means of comparison." While that's the basic plan, Studer has refined his system over the years and brought it to the point where it could be replicated, not only in other hospitals but also in any service business.

In Baptist's case, management met with all the employees and talked about the hospital's purpose, its reason for existing. "Everyone at the hospital said that they wanted to be the best," Studer recalls. "Becoming the employer of choice also became a goal at Baptist." Here's how Baptist rates patient and employee satisfaction plus employee performance:

  • Patient satisfaction. Baptist began measuring patient satisfaction, using an outside company to conduct the survey. "The results help us set specific goals," Studer explains. "They also give us an opportunity to recognize employees who receive positive comments on the survey."
  • Employee performance. To increase accountability in the organization, all Baptist's leaders and middle managers get "report cards" every 90 days. "That's how we align behavior to our goals and how we can reward objectively, which takes politics out of the game," says Studer. These report cards typically measure performance in four areas. "One is customer service. We measure it against our goal, which is to be in the top 1% of hospitals in the country," Studer says. "All the employees know what will satisfy our customers and where our weaknesses lie, because they know the results of the patient satisfaction survey." The other three scores on the report card monitor the manager's efficiency, expense management, and success at keeping employee turnover low. "Everyone's got a turnover goal based on his or her unit and its past history," Studer explains. "20% of my incentive compensation is based on employee turnover. That gets my attention."
  • Employee satisfaction. To reduce employee turnover and its associated costs, Baptist measures employee satisfaction as much as it tracks customer satisfaction. To get a handle on morale, the hospital holds company forums for employees every 90 days and regularly surveys them about their satisfaction with their jobs and workplace. "We used the same sort of survey tool to measure employee satisfaction that we'd used to measure customer satisfaction. We found out that the biggest thing that bugged our employees was that their evaluations were late. They want feedback," Studer observes. "Employees also want supervisors who accept their input with respect and appreciation. They want to know about matters that affect them."
After just two years -- in an environment in which hospital admissions are static or going down -- Baptist's admissions were up 8.3%, and outpatient volume was up 33%. As for patient satisfaction, Baptist ranked #2 in the country for all hospitals and #1 for hospitals with more than 100 beds. Employee satisfaction had improved 30%, and physician satisfaction had risen from 72.4% to 81.3%. Job turnover for nurses went from 30% to 18%.

Despite his emphasis on setting goals and measuring results, Studer believes that a leader's personal commitment matters, too. "You have to really believe in what you're doing," he says. "When I got to Baptist, I said, 'We're going to be the best hospital in the country,' and somebody said, 'Quint, you mean county.' I said, 'No, I mean country.' You have to decide what you want to do, act on that decision, and look at the results."