For years, health systems had a single priority when it came to staffing: get people in the door and keep them there.
The compensation strategies that emerged from that era — built largely around rewarding attendance — are now being revisited by HR leaders who say the moment calls for something more intentional.
Thomas Ahr, senior vice president and chief human resources officer of Springfield, Ill.-based Hospital Sisters Health System, told Becker’s his organization continually assesses basic assumptions behind how frontline pay rewards those doing the work.
“There’s a difference between paying for attendance and paying for performance — be it exceptional service, care, or quality for our patients,” Mr. Ahr said. “When we think about our colleague retention strategies, we want to make sure that those who are doing exceptional work are rewarded as such.”
He said the shift is already underway at HSHS.
“We have made changes in the past two years on pay practices, including greater front-line leader autonomy in merit pay changes, and are adding some new performance-based programs this year,” he said. “We want all of our colleagues to thrive, and rewards are one way to do this.”
Other systems have also already made the transition. At Florence, S.C.-based McLeod Health, senior vice president and CHRO Octavia Williams-Blake said the system currently has merit-based performance pay. Performance is measured by leader performance evaluations, she told Becker’s.
At West Burlington, Iowa-based Great River Health System, CHRO Michael Yost said performance differentiation is embedded directly into the system’s compensation architecture.
“At Great River Health, we believe compensation should reflect both market competitiveness and individual contribution,” Mr. Yost told Becker’s. “While we do not have a separate front-line incentive program tied to specific productivity metrics, we have intentionally embedded pay for performance principles into our compensation strategy.”
The annual merit cycle uses a three-tier rating system — exceeds expectations, meets expectations, or needs improvement — with merit increase amounts tied directly to those ratings. An “exceeds expectations” designation requires an employee to consistently perform above normal job expectations and demonstrate a measurable positive impact on their team or organization.
“We work hard to create meaningful differentiation so top performers feel recognized for their contributions, while balancing the financial realities and budget constraints that healthcare organizations face,” Mr. Yost said.
To promote consistency across departments, HR and senior leadership use a calibration process that activates when rating distributions exceed predefined thresholds, he said. Beyond the annual cycle, leaders have access to discretionary recognition funds for employees who demonstrate exceptional service, patient care or teamwork. Spot bonuses are also available for contributions that go beyond regular job responsibilities — leading a high-priority project, implementing a cost-saving process change, or delivering other measurable organizational benefits.
“Healthcare is fundamentally a team sport, which makes measuring performance more complex than in many industries,” Mr. Yost said.
