A new study by researchers at The Wharton School of the University of Pennsylvania found that when it comes to attracting top talent, an organization's reputation is more important than salary, flexible hours, and other benefits — at least within the investment banking industry.
Does the same hold true for healthcare? Let's investigate…
Certainly, I-banking and healthcare are vastly different industries. Yet, organizations within both share a common desire: To attract the best staff, across all levels, from front-line workers to physicians, and the CEO, who will in turn drive organizational performance.
In the study, as outlined by Harvard Business Review, Assistant Professor Matthew Bidwell and his colleagues polled MBA students on the top factors guiding their job decisions. The No. 1 determinant? "The extent to which firm reputation would help with future employability," according to the study.
Employers with top-tier reputations don't pay any more than other-tier employers, so paying more isn't a competitive advantage for recruiting top talent. Reputation is. Reputation is powerful for two key reasons. First, a top-tier organization has its pick of hires, which assures other top talent they'll be working alongside other bright minds — a good thing not only while at the organization but after, when these individuals will provide a top-notch professional network, according to HBR.
We see the same effect in other industries in well. In accountancy and law, for example, top-tier firms are highly sought-after employers, despite often longer hours and a more competitive environment than mid-tier firms. In these industries, higher-tier firms generally pay more, but even if they paid less, it's hard to imagine the a top-of-her class Harvard Law grad going to an unrecognized firm simply for more money. The "power" of a top-tier firm's name recognition virtually guarantees the employee will be an attractive candidate to a wide breadth of firms, if she chooses to go elsewhere later in her career.
The same happens in healthcare. The top college graduates attend the top med schools, and then attend the top residency programs. The Johns Hopkins' oncology resident knows he's training with some of the best oncologists in the world, and alongside the next generation's best of the best. Johns Hopkins doesn't have to pay residents significantly more than other programs to attract the best of the best — their reputation does that for them.
The problem with reputation — at least for those in the lower tiers — is that it's hard to come by, and hard to measure. While it's relatively easy to increase pay or offer new work-life benefits to improve competitiveness, improving reputation isn't as easily achieved. It's less tangible and more difficult to obtain, according to HBR.
Reputation seems to fit within the chicken-or-egg paradox. Top talent flocks to institutions with the best reputations, and institutions with top talent have the best reputations — and therefore a competitive advantage.
This is true in healthcare, just as it is in other industries. If you are the CEO of a company that needs to attract capital, Goldman Sachs is likely at the top of your list (assuming you can afford them), because you know using Goldman gets you access to the top minds in the industry. The same goes for the general counsel who is seeking the best counsel available; he knows a top-tier firm will deliver.
In healthcare, we don't necessarily need to go to a top-rated medical center for routine medical care. Quality is about the same, and often costs are lower, at community-based centers. But, there's no doubt, at least in my mind, that if I, or a loved one, was diagnosed with a life-threatening condition, like cancer, I'd be running to the closest U.S. News & World Report Honor Roll or Becker's Hospital Review 100 Great Hospitals in America hospital.
U.S. News & World Report has long used reputation as a factor in its annual rankings and has received considerable flack for doing so. This may be somewhat warranted, as outcomes data for many conditions are just as good at community-based facilities as they are at well-recognized academic medical centers. In response, U.S. News' recently announced next years' list will reduce the weight given to reputation from 32.5 percent to 27.5 percent.
Reputation, though, still makes up nearly a third of the ranking formula. I'm sure many facilities with great outcomes and care, but that lack national and international reputations, aren't happy, and that's fair. However, if the ranking is intended to be a true best-of-the-best list — representative of where healthcare providers would send their parents and children, if diagnosed with complex and life-threatening conditions — (and I believe it is), it's fair to include the less-than-scientific measure of reputation. After all, there isn't reliable outcomes data for the rarest or most complex conditions, because there simply isn't enough information on them, so perhaps we can think of reputation as a stand-in for this consideration.
But what if your hospital isn't on the Honor Roll? What if you're a great community-based provider, and that's all you want to be — all that your mission calls for?
Are you limited in the type of talent you can attract?
Perhaps in some ways, but luckily for healthcare leaders and recruiters, healthcare isn't I-banking. People don't enter it simply to make money. Of course, a high salary is a great benefit, but the vast majority of clinicians enter healthcare to help others, either through direct patient care, or through scientific discovery.
And many providers enjoy working in rural and urban environments because it allows them to make a bigger impact, giving back to the community. An investment banker who starts at a lower-tier firm doesn't experience that sense of contribution.
In fact, the reason the "Goldman model" works so well for Goldman is that the firm doesn't actually want to retain every new MBA it hires. "You bring in people young, you don't pay them much, and you get a lot of value out of them. At the same time, you don't want everyone to be managing director," Prof. Bidwell told HBR. The same goes for top law firms; not everyone can be a partner at a top-tier firm.
Healthcare is different. In general, health systems want every physician, mid-level provider and RN it attracts to stay with the system — and its community — for their entire career.
So, while the most recognizable health systems in the country have a lot in common with Goldman Sachs when it comes to how they recruit talent, smaller and less prestigious providers (luckily) don't have to count themselves out of being able to recruit bright minds. Instead, they should focus on their attributes that, for the right candidates, are more important than reputation: a sense of purpose, of meaningful work and of ties to an organization and community that outweigh the resume-improving benefits of working at a top-tier program. After all, in healthcare, reputation only matters to patients in a small percentage of very complex or severe cases. For everything else, compassionate care close to home is much more important.