It is important to first discuss the role of a business in society, especially a professional business such as pharmacy. The profession of pharmacy exists in society to provide a variety of goods and services related to the appropriate management and use of medications. These goods and services provide an array of benefits to patients, health care providers, and society at large.
The primary role of any pharmacy in society should be to benefit those that they serve, not necessarily to make money for pharmacy owners. Yet, if any pharmacy fails to bring in enough revenue to cover their expenses, the pharmacy will not be able to continue to provide goods and services that create benefits for others. And for a for-profit organization in a market-based economy (e.g., most community pharmacies in the United States), pharmacies must be able to generate a profit (the excess of revenues over expenses) large enough to justify an owner's investment in the organization. If pharmacies cannot generate profits, owners will lack incentives to invest in pharmacies, leaving patients and society without the benefits they provide.
Management expert Peter Drucker echoes this idea of businesses existing to serve society. A company should focus on serving its customers, and profits are simply a required resource for the company to continue to serve society (Drucker, 1973). Money and profits do play a role in a pharmacy, and that is to keep the pharmacy solvent so that it can continue to provide its highly needed goods and services to society.
A good way to demonstrate how this principle works is to ask the following question.
Why Did You Choose Pharmacy as a Career Path?
While interviewing for admission to a Doctor of Pharmacy program, students are often asked why they would like to become pharmacists. Prospective students are afraid to mention money and income as a motivator to enter the profession because they fear this motivation will appear unprofessional. The typical response from a prospective student is something like, “I want to help people” in an effort to appeal to the sense of altruism commonly found among health care professionals.
Now ask another question. If pharmacists were paid only minimum wage, would people still be so inclined to enroll in pharmacy school? Over the course of their professional education (not including prepharmacy studies), the average pharmacy student will accumulate over $107,000 of student loan debt (AACP, 2010). Even if minimum wage was $10 an hour, a full-time pharmacist working 2080 hours per year would only earn a little over $20,000 per year. $107,000 of student loans paid back at 7% interest over 10 years would cost over $14,900 a year in student loan payments alone. That would leave a pharmacist making a minimal wage with less than $500 a month to live on. Most pharmacists, like almost everyone who pursues a higher education, would like to seek a greater return on their investments of time, effort, and financial resources.
What this points out is that there are economic and financial realities to any business and any profession. There is a public mission, to serve society, and there is a private mission, to provide income for the operators of the business. It is not just the business owners that benefit from an organization's profits. Society benefits by having a valuable service provided. And all employee salaries, benefits, and career advancement are paid out of the income generated by any business. Whether the business is a for-profit organization (like most community pharmacies) or a not-for-profit organization (like many hospitals and organizations which provide care as a charity), the rules do not change, someone has to pay the bills.
The Role of Operations Management Within a Business
It is the role of operations managers in any business to ensure the smooth functioning of the business unit to achieve both its public and private missions. This sentiment was expertly outlined by Peter Drucker (1973):
And the manager in public-service institutions faces the same tasks as the manager in a business: to perform the function for the sake of which the institution exists; to make work productive and the worker achieving; to manage the institution's social impacts and to discharge its social responsibilities [p. 32].
An operations manager must understand the vision, mission, and goals of the organization to direct his or her workforce. The management structure of an organization requires multiple roles to be played. Typically large public corporations will have a chief executive officer (CEO) whose responsibility it is to direct the strategic planning of the organization, a chief financial officer (CFO) who directs the budget and financing activities of the organization, and the chief operating officer (COO) who is responsible for the day-to-day operations of the business. In a small business (e.g., an independent community pharmacy, a consulting firm), single person (e.g., a pharmacy owner, a consultant) may play all of these roles.
The operations manager focuses the energy and intent of the organization on what must be done today to accomplish the long-term goals of the business. These focused activities must also behave in alignment with the vision, mission, and values of the organization. The executive team creates the goals or “marching orders” for the organization. An operations manager must understand the intent of the orders and the results of potential actions to avoid disaster and ensure success.
At the most basic level, operations managers decide:
What must be done right now?
Who needs to be doing it?
What resources do they need?
When is the work finished?
It may be helpful to think of operations management in terms of the critical decisions that need to be made by operations managers. The ten decisions under the purview of operations management are described by Heizer and Render (1999) in Table 6-1.
Table 6-1. Decisions under the Purview of Operations Managers ||Download (.pdf)
Table 6-1. Decisions under the Purview of Operations Managers
Designing goods and services
What should be offered for sale and at what price? How should the business arrange the price and service component of the product to maximize perceived value using the relative value theorem?
What is the best workflow methodology to ensure productivity?
How do we provide sufficient productivity while maintaining impeccable quality?
Where is the best location for this service to be offered?
What is the best physical layout to ensure productivity? Does this layout fit with the pharmacy's workflow process?
How do you motivate and inspire people to do excellent work? How can you develop engaged employees that represent your brand and develop relationships with your customers?
When and where should each employee be when our customers need service?
Supply chain management
Which suppliers will best help the company meet the needs of our customers?
How does the business insure that it will have enough without having too much or too little inventory?
How can the business keep all the equipment and facilities in good working order?
Not all tactics and directives employed by operations managers are equally successful. However, operations managers are ultimately responsible for modifying their directives until the results are successful. All business tactics and directives must occur within the framework of the values held by the business. Tactics and directives that contradict the company's ideals even though they achieve financial results are not acceptable. For example, suppose that a pharmacy condoned the selling of cigarettes to teenagers without identification. The pharmacy could make a lot of money selling cigarettes to teenagers. But at the same time, this tactic would be illegal as well as contradict the health and wellness missions held by most pharmacies.
The Theory of Command Intent
It could be argued that the most challenging component of managing a pharmacy's operations is managing its human resources. A manager cannot supervise what every employee is doing all day long. The manager must find a way to ensure that employees are working on the right tasks at the right time. In addition to understanding the fundamentals of human resources management (see Chapters 10, 11, 12, 13, 14, 15, and 16), operations managers must develop plans and communicate them effectively. The business has no hope of achieving its goals without a clearly communicated plan of action.
A useful strategy to ensure that this is accomplished is known as command intent (Shattuck, 2000). The U.S. Army has determined that the most successful battlefield commanders are the ones who are able to think critically and change tactics during a mission, while still working toward the ultimate goal of capturing a strategic location, cutting off a supply line, or achieving a military objective. Good leaders are aware of the command intent of their orders and understand that circumstances constantly change while in battle.
Command intent gives a description of what the desired outcome is in relation to the current mission. That is, the command intent focuses on the endpoint, and does not summarize how to achieve that endpoint. The idea being that it will focus subordinates on what needs to get done, even when monumental change is encountered on the battlefield and the original plans are no longer able to be applied. The U.S. Army General George S. Patton summarized this philosophy by stating, “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.” The commander who gives very precise battle plan orders, but does not communicate the command intent to his or her subordinates is at risk of exposing soldiers to disastrous consequences. The battle never goes exactly as planned, so if the troops are not able to adjust to the constantly shifting tide of battle, they could be more easily defeated.
The concept of command intent can be applied to pharmacy operations management. An example of a vision statement for a community pharmacy may be “To be a recognized leader in customer service by providing affordable, timely, and effective drug therapies to improve our patients' lives.” There are many tasks involved in the day-to-day operations of a pharmacy to strive to accomplish its vision and achieve success. These include ordering medications and supplies, stocking shelves, receiving and entering patients' prescriptions, printing labels and filling vials, final verification, checking out customers, counseling patients, and offering a variety of services. These tasks should be accomplished as efficiently and effectively as possible. But how does a manager know when to change the priority of the tasks? In a busy pharmacy circumstances may change at any given moment, making it difficult for technicians and service employees to know the best task to perform at any given moment.
To continue this example, assume that the pharmacy's warehouse order of medications and over-the-counter goods normally arrives on Tuesday mornings. The pharmacy manager may plan to have additional clerks scheduled to work Tuesday mornings, ensuring that technicians have clear access to shelves, preventing delays in filling prescriptions and improving inventory control. If on any Tuesday morning one of the additional clerks calls in sick, the priorities of the pharmacy manager and other employees may need to shift. Even if the pharmacy manager is off duty and is not directly supervising associates, the command intent of his or her orders needs to be followed. If the pharmacy manager has communicated his or her command intent properly, the employees will immediately recognize the priority of customer service and cease putting away the order to help meet customer demand. The staff should be able to adjust the command from “put away the order” order to “serve the customers” without facing discipline.
Managers who give orders without providing a command intent context may unintentionally imply that putting away an order from the warehouse is more important than customer service. This type of rigid top down order giving can make employees feel powerless to make changes regarding how key tasks are accomplished. It also psychologically relieves employees of any responsibility that they might have felt to rectify a faulty directive and do what they know to be the real mission of the business. This ultimately creates inefficient operations. When an operations manager communicates command intent to associates and subordinates, the statement should be brief, and it should promote flexibility so that resources can be most efficiently utilized to accomplish tasks.
How Do Operations Managers Carry Out Command Intent?
Once the operations manager knows the command intent and how to communicate it, how do they use this knowledge to guide their daily actions? An operations manager must set specific goals for what needs to be accomplished at the pharmacy. These goals must be set in real time based on an accurate assessment of the situation.
Examples of operational goals might include the following:
Improving the speed and efficiency of patient service.
Are there bottlenecks in the workflow? Is the pharmacist's time being used efficiently? Is the business meeting its productivity goals?
Offering more services to patients.
Is there a service that a pharmacy's customers want or need that they are not currently providing? Can they provide this service at their traditional standard of quality? Do they have the expertise and talent to make it work?
Creating and maintaining a collegial work environment for employees.
Do employees enjoy working at the pharmacy? Are they challenged to excel? Does the team work well together when it matters?
Improving the knowledge of health care team members.
Can the pharmacy staff use their talents to improve the efforts of others? By identifying problem areas and resolving those problems, can the pharmacy improve their efficiency?
Regardless of the work environment, any list of operational goals should be formulated with feedback from employees, customers, and management. The list should be clear, concise, and align with the overarching vision of the business.
Executive-level management sets the vision and mission for the long-term value strategy of an organization. Operations managers use this guidance to create the goals or command intents of the business. The operations manager then must turn these goals into actions that create results. While the executive team views the mental process as “set the goals to direct the actions,” the frontline employees view the process as “complete the actions to achieve the goals.” The primary challenge for operations managers is to bridge the two points of view to create success.
In the context of the military, if the commanding officer is unable to continue in command, the next highest ranking officer takes over to ensure continuity of command. In the pharmacy world, if the pharmacy supervisor is not present or able to provide guidance at a particular time, a staff pharmacist must perform the operations management roles for the organization to be successful. This is a very common occurrence in pharmacies, in that there is no practical way in which an administrator can oversee or direct every event in a pharmacy. This is another of the many reasons why all pharmacists, from administrators to staff pharmacists, must have some degree of management skills (see Chapter 2).
When the official pharmacy supervisor is off duty, it must be clear to the work team who is in charge. In health care professions, the professional authority bestowed upon practitioners (e.g., pharmacists, physicians) will not allow them to abdicate their authority over the patient care process. When choices must be made to keep the daily activities (e.g., appropriate care of patients) aligned with the command intent of the organization (e.g., maximizing sales), the pharmacist on duty should have the authority to make that call. For example, pharmacists must have the authority to refuse to fill a prescription if the prescription would harm the patient, even though the command intent of maximizing sales may not be met in this particular case. Good pharmacists and operations managers realize that there are alternative methods to meet the command intent that do not put patient care at risk.
What Tasks Do Operations Managers Actually Perform?
Once a list of goals is established for the pharmacy, operations managers are charged with coming up with specific plans of action to meet these goals. Each goal is likely to have a number of tasks associated with it. These tasks drive what pharmacy managers do on a day-to-day basis. These tasks will change depending on the circumstances of the day, and the ways to accomplish these tasks can change. The tasks are what employees must complete to accomplish the command intent of the pharmacy.
For example, the list of operational goals previously mentioned can be expanded into specific action tasks for a pharmacy manager to use to direct his or her staff. By focusing on action steps, in the context of the business mission, the command intent of the organization can be clarified for employees. General goals such as “improving sales” do not belong on an action list. When the action list items are completed, a natural consequence will be an increase in sales.
Action steps are clear, concise, and can be acted upon in a short period. Read the following example action steps. Do you think the command intent is clear and unambiguous?
Goal #1: Improving the speed and efficiency of patient service.
Many different tasks can be derived from this goal. These might include
Cross train staff members to do each other's jobs.
Redesign the workflow to smooth out bottlenecks.
Upgrade the computer systems.
Add an additional computer terminal.
Take shorter lunch breaks to cover a staffing shortage.
Goal #2: Offering more services to patients.
There are many different services that customers may want or need. Are there services that a pharmacy could add that would provide a good return on their investment?
Develop a customer survey to identify unmet needs.
Conduct a customer focus group with ten customers.
Ask every employee to identify profitable opportunities.
Get all pharmacists immunization certified.
Create a layout plan for a new private counseling room.
Goal #3: Creating and maintaining a collegial work environment for employees.
There are many simple things that a manager can do to make work more enjoyable:
Create a career advancement plan for each employee.
Take one employee out for a private lunch each week.
Catch employees doing something well and praise them immediately.
Develop a corrective action plan for the employee who is always late.
Rotate job assignments during slow afternoon hours.
Goal #4: Improving the knowledge of health care team members.
One low-risk strategy for expanding a pharmacy manager's sphere of influence as a professional is to devote time and energy to improving the functional knowledge and skills of other providers:
Provide educational seminar on new drug developments.
Provide educational seminar on Medicare Part D annual plan changes.
Provide a lunch meeting for physician office staff to explain formulary changes.
Create a drug chart to assist prescribers in selecting the preferred drug for their patients.
Work with prescribers to apply for federal grant funding.
These are just a few examples of the types of tasks that pharmacy operations managers can develop. The tasks will change depending on the circumstances. The daily activities must change to meet the command intent of the organization. Operations managers must get the job done irrespective of the previously determined corporate plan.
For a business to operate successfully its employees must operate in alignment with the mission, vision, and values of the organization. Historically, management practices were built upon the industrial factory model that came into vogue with the development of the industrial revolution in the nineteenth and early twentieth centuries. As the economy moved from one of industrial production to one based on service jobs, Peter Drucker (1973) formalized the concept of a new type of worker distinct from a production worker that he called a knowledge worker:
The basic capital resource, the fundamental investment, but also the cost center of a developed economy, is the knowledge worker who puts to work what he has learned in systematic education, that is, concepts, ideas, and theories, rather than the man who puts to work manual skill or muscle. [p. 32]
Drucker envisioned the importance of the knowledge worker in today's society. He hypothesized that the knowledge worker cannot be productive unless he or she is allowed to figure out how they work best, and to modify their routine accordingly.
There are some key differences between a production job and a knowledge worker job. Factory production lines are optimized to control every step of the process to produce identical products of consistent quality. Knowledge jobs typically revolve around customer service. Customer service “production” is different from factory line production because the end product is different depending on the customer.
To manage a customer service “production line,” the employee must be empowered to figure out what the customer needs, and then modify the process to deliver the correct product. Knowledge workers now far outnumber factory workers in the United States economy. Knowledge workers need to be managed differently than production line employees (see Chapter 2).
Health care in general, and pharmacy in particular, cannot be effectively managed using production line management techniques because health care is essentially a customer service business. While many of the activities that pharmacists perform on a daily basis mimic a factory production line, there are critical distinctions that must be made. These distinctions are not based on the processes used, as the dispensing activities performed in pharmacies physically resemble a process-driven assembly line. Nevertheless, pharmacists do not just assemble prescriptions accurately; they are also responsible for knowing when prescriptions should not be filled, how medications should be appropriately used, and what to tell patients and their caregivers to help them get the most from their medications. The critical distinctions are that a pharmacist's professional license demands that they evaluate whether the prescription order is appropriate for the end-user and that they modify the order to achieve the intended outcome. Practically speaking, they must use their professional knowledge to deliver, or refuse to deliver, the proper product to the correct patient.
This professional knowledge component to what pharmacists do is the personification of knowledge worker. Even though prescriptions are written and dispensed correctly the vast majority of the time, the time one is not could lead to potentially devastating complications. One of the roles of the pharmacist is to ensure that medication errors and their sequelae are avoided. The efficient production of prescriptions must always be tempered with a healthy dose of professional judgment.
Pharmacy is not simply a production job where the same product has to be provided in the same fashion to every customer. The command intent of any pharmacy will involve providing high-quality patient care. Pharmacy is a customer service-driven profession that requires tailored approaches to each individual. A pharmacist needs to be able to apply their years of advanced training and knowledge to ensure that the right patient receives the right dose, of the right medication, at the right time, and in the right way.
Principles of Human Sigma
As mentioned earlier, it would not be difficult to argue that the most important aspect of managing a pharmacy is managing the people who work there. The employees are the ones who provide the myriad of goods and services to patients and customers. Many service-oriented industries have tried to apply quality control principles that were designed for production line models. Perhaps the most famous of these models is the Six Sigma program originated by the Motorola Corporation. Six Sigma assumes that output quality improves by eliminating defects in the production of the product (Pyzdek, 2003). The primary approach to performance improvement is based on the model known as DMAIC (Gygi et al., 2005):
The intent of the Six Sigma approach is to create high quality, identical outputs from standardized inputs. Many hospitals and health care systems use the Six Sigma approach to improve the quality of patient care. However, recent evidence suggests that this type of quality improvement process breaks down in a customer service enterprise. Unlike a production line, consumers of services desire and need different outputs, and those desires and needs are framed by the circumstances of that specific encounter. For example, no two patient encounters are identical, even if they are getting the same medication for the same condition.
The Gallup organization recognized this potential inability of Six Sigma to address a customer service environment effectively, and consequently spent a great deal of time and energy researching customer service encounters. The insights gathered from their research led to the development of the Human Sigma project.
The Human Sigma is based on the following fundamental principles (Fleming and Asplund, 2007):
“E pluribus unum”—Employee and customer experiences should be measured and managed under the same department. The employee–customer experience is directly linked, and to manage them separately would be inefficient.
“Feelings are facts”—Gallup's research has found that the customers that contribute the most loyalty, and therefore the most business, to a company are the ones that feel an emotional connection with it. Customers that passionately advocate for the company through word-of-mouth advertising are the backbone of any successful business. Employees should be managed to develop this kind of deep relationship with customers, and performance metrics should be oriented toward measuring these emotional connections.
“Think globally, measure and act locally”—In an environment where there are multiple locations run by the same management, it would be easy to assume that all locations will achieve the same results. This assumption could not be farther from the truth. Even if all locations have the same process strategies, policies, regulations, and expectations, there will still be a significant variance between their outputs. This is primarily due to differences in the “who” factor. Who is managing the location that is not performing? Who is working there as the face of the brand to the public? Engaging these people and giving them the command intent that they need will improve local performance.
“There is one number you need to know”—Gallup's vast quantity of data surrounding their Human Sigma project suggests that there is one performance metric that strongly predicts the success and future organic growth of a company. It is known as the Human Sigma metric, and it involves the levels of customer and employee engagement. The evidence has shown that when combined together, high levels of customer and employee engagement achieve synergy. The sum of the two is greater than the parts. Just having high levels one or the other will provide a degree of success, but balance between the two should be striven for.
“If you pray for potatoes, you better grab the right hoe”—Managers should gather the correct data in order to efficiently evaluate their company's performance and set goals. Improvement strategies should be custom tailored to each department's (or individual's) level of engagement. Finally, rewards and recognition should be designed to promote an increased sense of pride in employees' responsibilities and encourage improvement.
The Human Sigma data helps explain why scripting employee and customer relations does not work well and has the potential to backfire. Consider the following example of a production line Six Sigma management style mistake made at a pharmacy operation:
John is a pharmacist at a large chain pharmacy. The company has a library of training resources that are provided to each new hire. Among these resources are scripted strategies to deal with a customer when a prescription error has been made. The scripts are designed to placate the customer and decrease the likelihood of losing them as a patron. A key script involves waiving the patient's co-payment and providing them with a gift card as compensation.
Marie calls the pharmacy after noticing that her new prescription looks different from previous orders. John takes Marie's call, and after some research, discovers that Marie's prescription was filled for hydralazine 25 mg instead of hydroxyzine 25 mg. John follows the steps outlined in his training manual, explaining the mistake and letting Marie know that he would call her doctor. John then follows his corporate script and offers to refund her co-pay and give her a gift card.
However, Marie does not respond the way the corporate script outlines and anticipates. She becomes offended by the suggestion that her problem can be bought off with a gift card. She didn't want money, she just wanted for someone to fix the mistake and deliver it to her home. The mechanical use of the script made her feel like the company was trying to buy her off. She was insulted and transferred all of her prescriptions to another pharmacy.
This connects back to the earlier discussion of command intent in pharmacy management. It is important that pharmacy operations managers emphasize the desired outcome and not try to micromanage every aspect of pharmacy associates' jobs, especially the encounters they have with customers. Fleming and Asplund (2007) mention that inefficiencies can be learned by employees when too much of their ability to engage customers is taken away:
Once an employee becomes accustomed to ignoring customer comments or behaviors because they don't conform to the steps in the script the employee is required to follow in a given situation, employees will be primed to ignore customers in all situations. [p. 178]
If John had been given more freedom, he could have found out what Marie preferred and made the effort to fix the mistake for her in a more engaging manner. Even though an error had been committed and Marie was displeased, John had an opportunity to take care of her and through the outcome, instill a sense of deeper connection between Marie and the pharmacy. When training associates on customer service, operations managers should emphasize flexibility and the outcome desired, and then let the employee with the most intimate knowledge of the situation develop the best approach to achieve the desired outcome.
The Human Sigma data suggests that to form long-lasting relationships with customers and make them value a company above its competitors, the company must go beyond simply trying to achieve customer satisfaction. Companies must try to engage their customers on a deeper level. Engaging customers on an emotional level is what will gain their trust and loyalty.
How could a pharmacy operations manager engage his or her pharmacy's customers at a deeper, emotional level? Operations managers should start by recognizing that most customer engagement occurs at the level of their frontline employees, those that directly interact with customers. Employees that are also engaged directly with a company will want the company to succeed, and will more actively pursue tactics and directives to achieve mutual success. In addition, they will have a more thorough understanding of a company's short- and long-term goals.
The quality of the local operations manager is a critical ingredient in creating a highly productive workplace. Managers who consistently keep their employees engaged produce superior results for their organization. The Human Sigma project defined four key dimensions of employee engagement (Fleming and Asplund, 2007):
What do I get?
Do I know what is expected of me at work?
What materials and equipment do I get to use?
What do I give?
Do I get to do what I do best every day?
Have I received any recognition in the last week?
Does my supervisor care about me?
Do they encourage me to develop my skills?
Do I belong?
Do my opinions matter?
Do I agree with the mission or purpose of the company?
Are my coworkers committed to quality?
Does my best friend work with me?
How can we grow?
Has my career progressed in the last 6 months?
Do I have opportunities to learn and grow?
As a manager, what you do and how you act is more important than what you say. If a manager tells employees what he or she are going to do for them, but then they never get around to doing it, they have unintentionally communicated to their employees that they are not important. If a manager threatens to discipline an employee who is always late, but the manager never gets around to it, the manager has unintentionally communicated that he or she do not really care if employees are always late. If a manager criticizes employees when they do something wrong, but does not praise them when they do something right, the manager has unintentionally communicated that giving extra effort is not important. However, if a manager treats everyone fairly, refuses to accept less than everyone's best effort, and delivers on his or her promises, the manager and their organization are much more likely to be successful.