This article details the results of the survey, which was conducted in Dec. 2008 and included responses from 78 tax-exempt healthcare organizations from across the country.
Executive salary increases decline to 3.5 percent
The survey reports a median executive salary increase budget of 3.5 percent in 2009, down from 4.0 percent in 2008. Salary increase budgets also decreased for middle managers and staff but by a slightly lesser amount. The following chart shows median and average salary increase budget figures for each employee group:
Salary freezes more common
Among the major findings of the survey is that almost half of participating organizations discussed freezing executive salaries in 2009. While only about a third of those that considered it ultimately decided to proceed with a salary freeze, the number of organizations freezing executive salaries has more than tripled in a year, from 5 percent in 2008 to 17 percent in 2009.
The majority of organizations that froze salaries for executives did not freeze salaries for other employee groups. Of the 13 organizations that reported salary freezes for executives, only five froze salaries for middle managers and only four froze salaries for staff.
In each case in which salaries for middle managers or staff were frozen, salaries for executives were also frozen.
Performance strongly influences compensation decisions
As a part of the survey, organizations were asked to rank a number of factors that were considered in making decisions about executive salaries in 2009. Organizational and executive performance were ranked as the most important factors, followed by concern about the economy. A smaller number of organizations ranked public perception, hospital staff perception and medical staff perception as being very important.
Summary
Recent survey results show that freezing healthcare executive salaries will become more common in 2009. Of organizations that intend to award a salary increase, budgets for such increases have gone down to a median of 3.5 percent in 2009 from 4.0 percent in 2008. A number of factors influenced the decisions for health care executive salary increases.
Mr. Guthrie (james.guthrie@ihstrategies.com) is a consultant with the Executive Total Compensation Practice (ETCP) of Integrated Healthcare Strategies. If you would like to speak to Mr. Guthrie about the topic of this article or for more information about healthcare executive salaries, e-mail him or call (800) 327-9335.
About Integrated Healthcare Strategies
Integrated Healthcare Strategies offers a comprehensive array of healthcare-specific human resource consulting services. Its five specialty practices provides clients with access to consulting advice from industry professionals, and the best practice experiences of more than 1,000 healthcare organizations. Services encompassed within its five practice groups include executive total compensation design, executive search, governance and leadership consulting, physician services and human capital management consulting services. To receive information on its services, call (800) 327-9335 or visit www.ihstrategies.com.
