((Case Study))

You are the CEO of a well-known children's hospital that competes for physicians and leadership with some of the foremost children's institutions in the country. Your hospital is a proven leader in the development and application of innovative technology in treating children's illnesses and injuries. Your hospital endorses the values of stewardship, honesty, and integrity in all its relationships, among other values. To date, you have been responsible for the compensation packages of your top performers.You send pay and performance metrics for leadership to the compensation committee for approval; those metrics are then sent to the board to ratify. You have tried to be fair and impartial in your recommendations, and you have tried to benchmark your recommendations with outside information. Yesterday, a board member approached you about the possibility of making the compensation committee more independent. The committee would be charged with looking into various aspects of the hospital, including operations, IT, finance, patient services, and other areas, with the intent of setting goals for hospital leadership and ensuring they are real and measurable. Compensation would be tied to the achievement of these goals for middle management and above but not before the board is satisfied that goals have been met.

You have met with your senior leadership team.Many of them have strong feelings about the plan. Some oppose the idea because they are afraid of arbitrary goals being setgoals that are unrealistic and therefore unattainableby people unfamiliar with the work of a specific area. Some are in favor of the plan because it would force the board to become more knowledgeable about the hospital and its business practices. Others believe that a number of mechanisms are in place already that are designed to familiarize the board with the problems and achievements of the hospital. You are still undecided about the plan as you leave the meeting. That night, you continue to think about the plan and its implications.

1-Description of Case

2-Relevant Stakeholders and Values

3-Role of Administrator

4-Final Decision-Making Authority

5-Conclusion/Final Decision

6-Ethical Principles Illustrated

7-Summary of Learning