Compensation Concerns

John Commins, March 19, 2014

In our November Intelligence Report, 88% of healthcare leaders indicated that their organization's executive compensation structure needs enhancement to attract, retain, and engage leaders. What are some changes your organization has implemented recently or is exploring along these lines?

Michael D. Williams
President and CEO
Community Hospital Corp.
Plano, TX

On incentive compensation. The compensation committee of the board adopted a philosophy two years ago that says we will target the 50th percentile for executive compensation cash and, more important, the 75th percentile for total cash compensation. Inherent in that is an expectation that there is going to be at least a 25% cash incentive compensation payment. That is not just for the executives or the CEO; that is across the managerial staff of both the corporate and the hospital offices.

On competitive recruiting. Boards in the not-for-profit world have to understand that, while their compensation structures can't necessarily be the same as [those] with the investor-owned segment, there still has to be some ability to be competitive to recruit. We are seeing more individuals recruited with business acumen coming from the investor-owned sector to the not-for-profit sector. About 70% of our executive team has worked in the investor-owned sector. What we are finding is, to recruit the executive talent that we need ... we are looking into the investor-owned sector for those individuals who want to marry mission and margin, and we are having much success in bringing them over in competitive pay fashions, but out from under the pressure of quarterly performance.

On retaining talent. Compensation is but one factor in addressing turnover. Much more important than compensation is culture. One of the reasons we are seeing individuals jump from organizations is that, although the compensation package is attractive, the culture is not where they want to find themselves.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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