I have had to use game theory in my own work as a supervisor of a Cath Lab. Cath Lab is unique in that it is a specialized area of the hospital in which the staff have very niche skills. This makes experienced staff very hard to come by and, therefore, very valuable.

As a leader, I have had to advocate for staff pay and incentives in order to keep the lab running. As a leader, I have learned that I must make the decisions financially appealing for those making those decisions, otherwise my concerns will fall on deaf ears. If the firm believes there will be long-term financial loss due to a lack of investment now, it will be more likely to take my advice under serious consideration. The use of a credible threat did help my outcomes.

Staff were becoming discouraged and angry by the fact that they began to notice how other hospitals were paying their Cath Lab staff. Their on-call pay, specifically, was much better. On-call shifts are, what I would argue, the hardest part of working in the Cath Lab. I knew staff would ultimately leave if something did not change within a reasonable amount of time. I ultimately told executives that if we did not make an effort to at least match the call pay of other firms, then staff would ultimately leave. Even worse, experienced staff would leave. I also used evidence of the value of such experienced staff members. We had not had an experienced Cath Lab nurse or tech apply in over three years. Losing such staff would be detrimental to the reputation and efficiency of the lab. Although it would obviously cause upfront costs to the organization, the long-term repercussions would end up costing the hospital even more money. They would have to close labs, might lose physicians due to inexperienced staff, and likely have to pay higher wages anyway. So, why not get ahead of the inevitable?

I believe this is an example of some sort of a fast-second strategy. The other dominant firm in the industry had already used a first-mover strategy. This lead to an exodus of staff from my firm to that firm. My firm used the strategy of our culture being enough to keep people, but the pay got to be such a high discrepancy, that culture did not matter anymore. I admire the other firm because they were able to recognize the writing on the wall for procedural areas that had to take on-call shifts. Retention was becoming difficult, so they came up with a new pay strategy to help with retention. This lead to them having the reputation of having the best pay in the market. I do believe that in taking my advice, my firm has the opportunity to be more of a contender in the market using a fast-second strategy. Fast second strategies are beneficial because firms can take what they have seen from another firm and optimize it, making their strategy even better than the original (Harvard Management Update, 2008). Although loss had already occurred, there is a chance to come out better than before.

Reference:

Harvard Management Update. (2008, February 26). Fast second. Harvard Business Review. 

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