ZS revamps incentive planning for national home health organization

A national home health organization sought to redesign incentive plans for its sales, operations and clinical teams to tie performance-based compensation to critical growth goals and respond to shifting market and reimbursement dynamics. ZS collaborated with HR leaders to simplify the program, align shared goals across administrative and clinical leadership, and make sure plan metrics and objectives were consistent with guiding principles and broader business needs.

The challenge

The home health organization wanted to reimagine incentive plans for nearly a dozen roles to help improve productivity and fuel profitability. ZS identified several other improvement opportunities:

• Existing plans were not aligned with role responsibilities and organizational business objectives. Plans were too heavily weighted on financial incentives and did not have enough focus on clinical quality or talent retention goals.
• A disconnect between leadership and direct report metrics. This caused a misalignment of priorities between individual contributors and first- and second-line leaders.
• Participants perceived the plans to be unfair and overly punitive. This was fueling decreased motivation. Marginally missing a goal led to a significant reduction in payout, and some payout thresholds were too high to drive desired behaviors.
• A large number of individual plans led to high administrative burden. This burden made the plans unfair for participants within the same role type.

The solution

ZS conducted nearly 40 immersion interviews and an in-depth analysis of historic plan performance to identify pain points and gauge business alignment. The process was guided by the home health organization’s commitment to ensuring the plans reflected individual duties and to improving talent engagement and retention. ZS also used early engagement with plan participants to begin an ongoing change management strategy by giving participants a voice in the design process.

“The ZS team has done a good job of listening and acknowledging my feedback,” said a senior vice president of sales. “Not all firms we’ve worked with have done this as regularly.”

ZS collaborated with the company’s sales, operations, clinical leadership and compensation teams to develop streamlined, engaging incentive plans that reward growth in core business metrics such as admissions, EBITDA and nurse retention. ZS modeled the impact of the proposed plan options to confirm that changes were financially responsible and that they advanced key objectives.

ZS socialized the new plans with business, operations, finance and HR leaders to secure stakeholder buy-in and prepared to introduce them to participants with a cascading communication strategy. ZS created supporting launch materials for plan participants and leaders, including rollout presentations, manager talking points, FAQs and payout examples.

The impact

ZS worked with the client to:

• Create common metrics across leadership to support organizational goals. We added shared metrics to administrative and clinical leadership plans to reinforce collaboration.
• Align manager incentives with direct report’s goals. We supported the alignment of shared goals across all levels of the organization by creating common metrics from sales reps through regional vice presidents. For example, the dollars tied to home health admissions increased by 11% with the addition of an admissions metric to sales leader plans.
• Reduce the number of plans and plan metrics to simplify design. We removed individual legacy plans to streamline plans within the same role and reduced the total number of plan metrics by 50%.
• Enhance the focus on metrics that are critical to organizational success. We increased metric weights to motivate and support desired behaviors and added new metrics that were critical to organizational success such as nurse turnover and admissions.
• Improve plan engagement. We removed unfair plan payout thresholds to increase the number of participants receiving a payout by nearly 10% and improve plan motivation.

ZS collaborated with HR leaders on plan implementation and automation by moving from a spreadsheet-based system to an online administration platform, which has reduced administrative burden and improved payout accuracy.

“There is a certain elegance to the work this team has done,” the company’s chief HR officer said. “And while there are changes, we must remember that many of these changes are for the better of our employees.”