Participatory management at Boston's Beth Israel Hospital

In the mid-1980s, the senior management of Boston's Beth Israel Hospital became concerned that continuous cost-cutting efforts could lower the quality of the hospital's services and the morale of its staff. This led them to investigate organizational approaches to "participatory management" to determine whether any of these might be of value to the hospital. They decided that an approach developed in the 1930s called the "Scanlon Plan" would be compatible with the workplace culture of Beth Israel, could help the hospital meet the ongoing problems of change, and could help the staff at all levels develop a sense that they owned the problems of quality, productivity, and efficiency, which would motivate them to address these problems constructively in the face of necessary budget constraints. This plan has two mechanisms to foster employees' positive participation: (1) a process to ensure that all members of the organization have the opportunity to improve productivity, primarily through an open suggestion system and a responsive committee structure, and (2) a means of providing equitable rewards for all members of the organization as productivity and quality improve. This essay describes in some detail the plan and why it was selected, explains how it was adapted, prepared for, and finally implemented in 1989, and reports its success, lessons learned, and future plans as of early 1992. The authors believe Beth Israel's experience with the Scanlon Plan is noteworthy as an example of a leading teaching hospital's taking a quality improvement program seriously and making it work.