As noted in the chapter, healthcare organizations are faced with the challenge of balancing internal equity with external competitiveness. In this exercise, compare two organizations’ approaches to setting salary levels. Your first task is to identify two healthcare organizations that are similar in mission and size. For example, you may select two medical group practices, two medium-size community hospitals, or two nursing homes of similar size. You may choose two organizations in the same geographic area and labor market or two that are in different markets. Your second task is to identify the senior HR executive or the individual most closely involved in developing and implementing the compensation program in the organization. You will interview this person, so this person will need to understand the compensation philosophy, system, design, and decision-making process. The goal of this exercise is to identify the organization’s compensation strategy, including its approach to balancing competing compensation objectives. Your third task is to summarize the compensation philosophy, policy, and practices in each organization and write a report on the similarities and differences between the two compensation systems.

Questions to Guide a Compensation Comparison

1. What is the policy of the organization on compensating employees at market rates? Does the organization have an explicit policy to pay below market, at market, or above market? Does the approach vary by the type of employee and the particular labor market?

2. Does the organization have a specific strategy for attracting, recruiting, and retaining employees in difficult-to-fill positions? If so, for which positions has the organization encountered these issues? What strategies have been used in these circumstances? Examples include (but are not limited to) sign-on bonuses, retention bonuses, paying above-market rates, and employee referral programs.

3. How does the organization evaluate jobs—that is, how does it “price” jobs? Does it conduct a formal job evaluation process? If so, how often and under what circumstances? Do any jobs exist for which the market dictates the salary, rather than the salary being the result of a job evaluation process?

4. Does the organization face any of the following problems? If so, how does the organization address them? – Wage compression – Employees “topping out” of their salary range – High prevalence of employee departures because of compensation-related factors – Perceptions among employees that aspects of the compensation system are unfair

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