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Performance Pay for MGOA Physicians A Case Solution
The MGOA hospital is faced with a situation of financial difficulties. This is because of no compensation system based on the performance of these physicians. Dr. Rubash was hired as the chief after which the employees thought that the financial difficulties would be resolved. The chief developed a compensation system that led to a paradox with the satisfaction of the employees. However, the recommendation was that the doctors be communicated with the long-term benefits of the system so that they are satisfied. The low bonus rate was a concern. The communication was suggested to be such that it shows the employees that the profits would help in the development of the hospital, which would, in turn, lead to greater income for the doctors.
Following questions are answered in this case study solution
What are the values and culture of the hospital? What is important to them as an institution? To what extent is the compensation system aligned with those values?
Evaluate the new compensation system that is linked to profitability. What are the pros and cons? Does it help the hospital fulfill its mission?
In a competitive labor market, does this compensation system help recruit and retain the right talent? Explain – and if not, what would you do to make it more effective?
Case Analysis for Performance Pay for MGOA Physicians A
1. What are the values and culture of the hospital? What is important to them as an institution? To what extent is the compensation system aligned with those values?
The core value of the hospital is providing quality healthcare to patients in the scope of orthopedics. The main aim of the organization was to develop a hospital that was centered on the patients and was a model of efficiency. This model of efficiency was required to make sure that the delivery of healthcare services to the employees was smooth and timely. Apart from that, the hospital’s vision was to promote the education of orthopedics and play a role in the exchange of information about the same. One factor that was identified as an important one was the financial stability and security of the hospital. This important value was added after Dr. Rubash was hired in the company as the chief. This was because financial stability is important for the achievement of the values and vision of the organization. The financial difficulties were analyzed by assessing the doctors based on their financial contributions to the company. Some were a source of profits for the hospital while others were serving as costs for the hospital.
Those doctors who were the source of profits for the hospital were compensated on the same basis. This was done in order to develop an institution that rewards its employees for the work and contribution that they have to the success of the institution. Previously, the doctors were compensated based on their expertise and seniority. The basis was not on productivity that was the main benefit for the hospital. The new compensation plan developed by Rubash was based on the profits that the doctor generated for the hospital. This plan was based on bonuses and the adjustment of salary based on the financial performance of the doctor. This salary was adjustable based on the years. The bonus was based on 50% of the profits generated by the doctor. The basic salary was also affected by financial performance. This meant that a deficit rather than profits would mean that the basic salary figure is adjusted to lower than before. This plan was aligned with the aims of the hospital and would help in decreasing costs and increasing profits for the hospital.
2. Evaluate the new compensation system that is linked to profitability. What are the pros and cons? Does it help the hospital fulfill its mission?
The hospital was facing difficulty in financing because of no formalization of the education of costs despite being an orthopedic hospital of great value. The financial problems seemed to be solved in some time since Dr. Rubash had been appointed the chief of the organization. He came up with a new compensation system for the employees that would help the hospital in reducing costs and increasing the profitability so as to overcome the financial difficulties. It allowed doctors to earn extra bonuses by generating profits for the hospital.
The pros of this system are that it would help the organization is dealing with the financial problem that it is currently facing. The increased profits would help in the development of the hospital which would be beneficial for the doctors in the long-run. Furthermore, the negative compensation system was likely to increase the motivation for the doctors who were a source of deficits for the hospital rather than profits. Also, it would help in the achievement of the mission of the organization.
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