Read the following article on motivating employees:
“Motivating People: Getting Beyond Money” by Dewhurst, Guthridge, and Mohr (2009)
Review the Special Topics: 1) Motivation and Behavior 2) Compensation and Benefits and 3) Cost of Benefits as needed. Your textbook can also be used as a source of information.
The Scenario
Assume that you are the new CHRO of a 450 bed, metropolitan full-service hospital with over 1,800 employees — Congratulations! In spite of ranking at the 50thpercentile for wages in the area (there are 3 other hospitals within 10 miles of your facility), morale among employees is at an all-time low. A recent employee survey revealed the poor morale as well as a high rate of burnout. (In fact, 30% of the nursing staff admitted to currently looking at other jobs.) Staff turnover during the past 2 years has been about twice the previous rate and absenteeism was up 50% over the same time period. The last COO introduced an employee “flex time” plan that saved the hospital 15% in wage costs by sending employees home when the patient census was low. (Of note, 70% of nurses managed to consistently work a 40-hour week last quarter.) This program gives all employees 3 days of personal time/sick time.
Current employee benefits include a small life insurance policy, a 401k plan (no matching) and health insurance for employees, but not spouses or dependents. No other insurance or benefits are currently offered. (80% of employees have a “significant other” and 55% have at least one child between 1 and 12 years old.)
Demographics and more information:
Current Workforce (excluding physicians)
Boomers – 30%
Gen X – 40%
Millenials (Gen Y) – 25%
Gen Z – 5%
Minimum Wage Workers are 15% of the workforce and their current average pay rate is $10/hr. The majority of these workers are in food service, housekeeping, patient transport, clerical and medical assistants.
The Assignment
As the CHRO, you have been tasked with designing a total compensation program to fix the mess you have inherited. The hospital has given you a budget to work within and some options to choose from, which are summarized below.
Item Description Relative Cost Points
Wages Increase for all salaried and professional employees
to 65th %-ile 4.0
Min Wage Increase Min Wage to $12/hr 2.0
Increase Min Wage to $15/hr 3.0 (accompanied by a
5% lay-off)
PTO Increase PTO to 7 days/yr 1.5
Increase to 10 days/yr 2.5
Extended FMLA (12 weeks paid) 3.0
Insurance Add spouse/dependent coverage 2.5
Add life insurance upgrade 0.5
401k Add 3% match 2.5
Add 6% match 4.0
FSP Flex Spending Plan – includes
Dental, optical, meds 1.5
Education Tuition supplement – current semester 2.0
Student loan repayments –
(Pay off 30% of balance, up to $12,000) 3.5
Child Care Cover 30% of cost for employees 2.5
Offer On-site day care for all employees 4.0
Required: Describe in detail the total compensation package you will recommend to the CEO, keeping your total cost at or below 13.0 Relative Cost points. If you can bring a plan that is 12.0 Relative Costs points or below, you will personally receive a $10,000 bonus – which will remain confidential. You are not allowed to create alternatives through extrapolation, e.g., “add 401k match at 4% for 3.5 Relative Cost points” nor propose items not listed above that bring with them any significant cost.
Be certain to discuss why you have selected each of the compensation and benefit features included in your recommendation. This discussion could include the importance of the proposed feature to a group of employees (ex: nurses), a generation of employees (ex: Gen X), or the Hospital itself (ex: marketing, recruiting, etc.).
Expert Solution Preview
Introduction:
As a CHRO of a metropolitan full-service hospital with a low morale among employees, high rate of burnout, and staff turnover, it is crucial to design a total compensation program that can boost employee satisfaction, engagement, and retention. The hospital has provided a budget and several options for the compensation program. The objective is to recommend a compensation plan that stays within the budget and resolves the current issues faced by the hospital.
Recommendation:
After analyzing and comparing the cost and benefits of each option, I recommend a compensation plan that includes the following features, keeping the total cost at or below 13.0 Relative Cost Points:
1. Wages – Increase for all salaried and professional employees to 65th %ile – 4.0 Relative Cost Points.
2. Min Wage – Increase Min Wage to $12/hr – 2.0 Relative Cost Points.
3. PTO – Increase to 10 days/yr – 2.5 Relative Cost Points.
4. Insurance – Add spouse/dependent coverage – 2.5 Relative Cost Points.
5. 401k – Add 3% match – 2.5 Relative Cost Points.
6. Education – Tuition supplement – current semester – 2.0 Relative Cost Points.
Explanation:
1. Wages- Increasing wages for all salaried and professional employees to the 65th percentile will help to attract and retain experienced and skilled workers. This will also create a competitive advantage for the hospital, helping to attract better talent and reducing the high rate of staff turnover.
2. Min Wage- Increasing the minimum wage to 12$/hour will not only improve the overall standard of living for low-wage workers but will also reduce the wage gap and lead to greater job satisfaction. This will help to retain valuable employees who are currently considering other job openings.
3. PTO- Increasing the PTO to 10 days per year will give employees extra days off, resulting in increased job satisfaction and better work-life balance. This will reduce the high rate of absenteeism and alleviate the burnout among employees.
4. Insurance- Adding spouse/dependent coverage will provide better coverage for employee families, enhancing their overall quality of living. This will also promote a better work-life balance, ultimately leading to greater employee satisfaction and engagement.
5. 401k- Adding in a 3% 401k match plan will help improve the retirement savings of employees, making the hospital more attractive to talented individuals. This can be leveraged as a recruitment leverage point.
6. Education- Tuition supplement for the current semester will help employees improve their skills, leading to better career prospects within the hospital. This program will help to retain valuable staff members who have shown potential for growth within the organization.
Overall the total compensation program we are recommending will cover many demographics of employees, spanning Gen X through Millennials. As the baby boomers start transitioning into retirement, millennials are becoming increasingly vital to the workforce. Additionally, the hospital offers coverage for child care. Overall, the balanced, competitive, and primarily utilitarian compensation package aim to motivate and retain staff to improve the overall well-being and various aspects of the facility.
