Welcome to the Winners Circle Trends in Healthcare

Welcome to the Winner’s Circle! Trends in Healthcare Compensation Arkansas Healthcare Human Resources Association April 1, 2016

Overview The Secret to Making Compensation Plans: • Quick and easy to update • Easy to administer • Internally equitable • Externally competitive • Affordable for your hospital 2

Amazing Secrets The Secret to Losing 10 Pounds this Week Without Diet or Exercise! 3

Amazing Secrets The Secret to Feeling Totally Rested & Alert On 3 Hours Sleep a Night! 4

Amazing Secrets The Secret to Leading a Perfectly Organized Life! 5

The Simple Truth There Is No One Secret! No Easy Way! 6

The Simple Truth No Secret Lets You Avoid The Work 7

Simple Truth Takes HARD Work to Be A Winner 8

Compensation Programs Are No Different The Satisfying Work of HR Champions • Analyzing Compensation Structures • Determining Best Data to Utilize • Dissecting Causes of High Turnover 9

Analyzing Compensation Structures Issues That Surface • Pay compression • Internal Equity • Market competitiveness • Complexity of compensation programs • Perception by employees • Turnover 10

Issues Are Not Unique • Many healthcare organizations have seen very low pay increases in the last seven years – now we’re seeing some rather aggressively catching up. • ACA requiring substantial time from HR departments. • Other issues are coming down the road: o FLSA changes ($23, 660 threshold to $50, 440) o Minimum wage increases (1/1/17 AR to $8. 50) 11

What Can Be Done? • A top to bottom review of your compensation program every 3 to 4 years. • Market price at least 70 – 75% of your jobs • Update pay structure(s) based on market analysis • Analyze each employees placement in a pay grade and their position in it 12

Monitor Between Reviews • Between comprehensive reviews, actively monitor and take appropriate action in these areas: • • • Hire-On Rates Market Competitiveness Internal Equity Compensation Program Complexity Pay Administration Pay Increases Leadership Communication Transparency Perceptions 13

Hire-On Rates • Years of experience • How does it fit with current employees? • Typically, pay compression is the biggest problem with hiring. • Even in a pay freeze, organizations tend to hire at competitive rates. • Current employees fall behind. 14

Market Competitiveness • Is your organization ahead of the market? • Sometimes organizations are paying more competitively than the market • Is your organization falling behind? How far? • Pay now or pay later 15

Employees Not As Patient “I’ll gladly pay you Tuesday for a hamburger today. ” –Wimpy Wellington 16

External Competitiveness 75 th Percentile of Market Median Current Salaries 25 th Percentile of Market 17

External Competitiveness 75 th Percentile of Market Median 25 th Percentile of Market 18

AHA Survey Data Let’s look at the data points and what they mean. 19

AHA Survey Data All of these numbers come from actual pay. 20

AHA Survey Data 21

AHA Survey Data These numbers are guidelines, NOT pay rates. 22

Market Competitiveness • Market adjustments • Monitoring hot jobs • Word on the street • Metrics • Turnover rates • Compa-ratios 23

Turnover Rates Comes from different places: • It’s not always market competitiveness. • Can see years of experience affect things. • It can be the speed at which employees move through the ranges. • It can actually be the design or the administration of the plan. 24

Compa-Ratio Job Title Compa-Ratio Radiology Technologist 1 Radiology Technologist 2 Radiology Technologist 3 Radiology Technologist 4 Radiology Technologist 5 Radiology Technologist 6 Radiology Technologist 7 Radiology Technologist 8 Radiology Technologist 9 Radiology Technologist 10 Radiology Technologist 11 Radiology Technologist 12 Radiology Technologist 13 114. 9% 110. 8% 110. 6% 108. 2% 107. 9% 107. 0% 104. 3% 104. 2% 100. 5% 98. 6% 96. 4% 93. 3% 74. 0% Overall Compa-Ratio for the position is 102. 4% 25

Complexity of Compensation Program • Quick Fixes Create Long-Term Issues • Creating a new job level (Pharmacy Tech 1 – 3) • Adding a new pay grade • Developing a new pay structure for a job family or facility • Job offers • Fixing trouble-spots on a regular basis creates a reactionary system 26

Pay Administration • How quickly are employees moving through the ranges? • Are experienced, fully proficient employees close to the range midpoint? • How are you handling employees above the range maximum? • Are you adjusting your ranges for market movement on annual basis between comprehensive compensation program updates? 27

Typical Range Placement • Employee A, hired 2 years ago with 0 years of relevant experience when hired, solid performer • Employee B, hired 8 years ago with 0 years of relevant experience when hired, solid performer • Employee C, hired 20 years ago with 0 years of relevant experience when hired, solid performer Range Midpoint (Market Median) Range Minimum Employee A Base Pay 80% 85% Employee C Base Pay Employee B Base Pay 90% 95% 100% 28 Range Maximum 105% 110% 115% 120%

Pay Increases • How are they awarded? • Across the board • Based on years of experience • Merit matrix 29

Leadership Communication What you need to be communicating: • Market competitiveness of organization • Entire organization • Potential trouble areas • Employees perception of compensation • Business case for pay increase budget, market adjustments 30

Transparency • How well do your managers and employees understand your compensation program? • They do not need to understand all of the details. • Employees need to know enough to believe it is fair. 31

Perception • Even market competitive salaries are looked at negatively without an annual pay increase. • Employees begin to feel like the organization does not value their contribution. 32

Staying on Top of Compensation • Difficulties will come and tough decisions will need to be made. • Strategically positioning your compensation program will mean your organization is better prepared when difficulties occur and you will not be in a reactionary mode. 33

Questions If you have questions or need to discuss your compensation programs, contact: Theresa M. Worman 1. 800. 300. 9570 tworman@Compdata. Consulting. com 34