HR Pulse - Fall 2007 - (Page 28)

28 HR Pulse Fall 2007 In the world of not-for-profit hospitals, legally required disclosures have not changed all that much since we were required to file Form 990. For CEOs and other “C-Suite” talent, the executive compensation trends established in the for-profit world will probably prevail in the not-for-profit world as well: • The competition for top leadership talent will intensify, driving leadership compensation higher and higher. Form 990 disclosure will not go away. It might even sharpen up, with some of the definitions and required reporting becoming more parallel to Sarbanes-Oxley reporting requirements. • The more readily available senior-level compensation information will have many effects. • Executive recruitment will lose a compensation bargaining advantage. • Unions organizing in health care have already used available executive compensation data in “corporate campaigns,” encouraging employees to hold senior leadership accountable for performance and for salary equity. • In any event, any employee could discover, with a little diligence, what the “C-Suite” people are being paid. • Not-for-profit boards will be held more accountable for executive compensation. Third-party review of executive compensation, reported to a board compensation committee, has already been widely adopted to assure compliance with state and local requirements for charitable organizations. We also must be careful that compensation is market-based, to assure that a 501(c)(3) not-for-profit organization has avoided any “private inurement.” • Performance-based compensation continues to grow in use among not-for-profits (“NFPs”). Most often, NFPs base variable compensation on a mix of financial and nonfinancial metrics, to assure that the health care organization’s mission objectives, not just its financial targets, are being served. • NFP boards are increasingly holding C-Suite leadership accountable for performance. In addition to the payment or withholding of incentives, turnover among C-Suite leadership continues an increasing trend. But What About the Average Health Care Worker? In a collective bargaining milieu, compensation of union members is naturally transparent. It is typically a function of negotiated pay rates in a table, with job classifications and employee seniority dates dictating a fixed base pay. But the majority of health care workplaces are non-union. Many health care organizations operate merit pay systems, with these common features: • Managers can hire people within a range of pay. • This allows managers to provide higher rates of compensation for more experience, or enables managers to “match or beat” existing base rates as reported by a candidate from a competing employer. • This also can create internal pay inequities. • Within a pay range, salaries can progress with merit increases. • Individual salaries can also be adjusted by • “structure adjustments,” • cost-of-living increases, or • market increases. • Pay ranges in health care vary a great deal, from as little as 30% to as much as 60% and more6. • The use of variable or incentive pay does exist in some hospitals, but its use today is far from widespread. • Some occupations are paid by the unit of service, such as home care workers being paid by the visit. • Many other health care workers are “flat rated,” especially those who are contingent workers or who otherwise do not qualify for benefits. Given the nature of this type of system, individual base pay can vary across a wide range of actual amounts paid for a variety of individual reasons. If a worker came to you and wanted to know why she was making less than a co-worker in the same job, it might be very complicated to explain the differences. And one possible outcome is to say that the pay differences were more coincidental than logical. A consequence of this is actively to discourage disclosure of individual base pay7. Some employers take this to the level of disciplinary action: employees who are caught discussing their individual pay amounts can be disciplined or even discharged8. Another issue is the work culture of health care. Health care careers tend to attract people who are motivated by a need to serve others, and have a high motivational locus around affiliation. Money could be cited as a secondary motivational factor “I’m thinking about coming to work where you work— how is the pay there?” You do not want the employee’s response to be, “We’re not allowed to discuss pay.”

Table of Contents Feed for the Digital Edition of HR Pulse - Fall 2007

Contents Executive Director’s Letter President’s Message HR Leader Profile: Lisa McDaniel Spotlight on Community Citizenship Culture of Engagement How Transparent Should Healthcare Compensation Be? The Value of Assessment Testing in the Recruitment Process Technology Dramatically Changes FMLA Compliance Creating a Magnetic Culture™ Taking It to the Hill: An Advocacy Update 401(k) / 403(b) Fee Lawsuits – Are You the Next Target? Compensation Offers – A Better Process Find It Again Pulse Points Who, Why and Where Conference Highlights Schedule at a Glance Keynote Speakers Social Events Conference Sponsors Exhibitors Index to Advertisers

HR Pulse - Fall 2007

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