Are “peanut butter raises” — across-the-board pay increases spread thinly across employees — a good idea in health systems? Some leaders are skeptical.
While compensation experts argue it sends the wrong signal to high performers, the practice appears common. A July survey found that 43% of respondents across industries said their organization plans to give salary increases to at least 95% of its workforce in 2025, and nearly 80% of companies said they will give raises to at least 80% of employees.
Little Rock-based University of Arkansas for Medical Sciences raised its mimum wage from $15 to $16 per hour in April, while also maintaining targeted investments in top talent. Michelle Whittier Krause, MD, senior vice chancellor of UAMS Health and CEO of UAMS Medical Center, told Becker’s the system takes a multifaceted approach. It uses its minimum wage increase to advance a living wage commitment while separately rewarding high performers through clinical ladders, quality and productivity incentives, and academic recognition for researchers and educators.
“Compensation is very dynamic. There’s a lot of external internal forces that you have to respond to, so I don’t think that we’ve set it on one approach,” Dr. Krause said. “We use multiple different approaches in order to keep a resilient workforce.”
She added that base salary is only one piece of what attracts and retains employees, pointing to benefits, leadership development and career mobility as equally important, including partnerships with the Sam M. Walton College of Business for an executive leadership program in healthcare.
Becker’s connected with eight other health system leaders to get their reactions to the concept and how they are balancing broad-based workforce investments with efforts to retain high performers.
Editor’s note: Responses were lightly edited for clarity and length.
Bill Manns. President and CEO of Bronson Healthcare (Kalamazoo, Mich.): Healthcare leaders should be cautious about using blunt instruments. Broad-based raises can feel equitable on the surface, but they fail to distinguish exceptional contribution from average performance; they send the wrong message. Interestingly, across-the-board cuts create the same problem in reverse — they communicate that everyone should bear the consequence regardless of performance, impact, or value. Both approaches may be administratively simple, but both can quietly and quickly damage culture.
Compensation strategy should reflect nuance, not convenience. Healthcare organizations absolutely need to make meaningful investments in their workforce, particularly after the extraordinary demands of recent years. But sustaining a high-performing culture requires clear differentiation for top performers, critical talent, and those who consistently advance quality, service, and operational excellence.
Healthcare cultures are rarely improved by either spreading the peanut butter evenly — or scraping it all off at once.
Cliff Robertson, MD. President and CEO of Saint Francis Health System (Tulsa, Okla.): At Saint Francis Health System, we implemented a true merit-based compensation model in 2025. It allows leaders to differentiate and reward those who consistently exceed expectations while maintaining competitive pay.
A merit-driven approach requires more from our managers in terms of evaluation and accountability, but it ultimately strengthens engagement, supports retention of high performers and reinforces a culture of excellence across the organization.
Darin Roark, BSN. President and COO of Wentworth-Douglass Hospital (Dover, N.H.): Throughout my healthcare leadership career, I have found that the merit based raise system that may subjectively allocate an additional 0.5% or 1% toward a high performer has a minimal short lived impact on the high performer’s morale. Step programs that reward clinicians based on years of service are deemed fairer by the majority of clinical teams. The easiest way to reward high performers is for leaders to demonstrate accountability toward leading improvement amongst lower performers, which improves the work environment for all.
Eric Cole. Senior Vice President of Human Resources for Scripps Health (San Diego): At Scripps Health, we view broad-based workforce investments and differentiated recognition not as competing priorities, but as complementary commitments that together sustain a high-performing, mission-driven culture.
We have long maintained a merit-based compensation philosophy, intentionally designed to avoid “peanut butter” approaches to pay. While we remain committed to competitive, market-aligned wage structures that support all employees, we differentiate compensation based on individual performance, contribution, and impact. This ensures that our highest performers are recognized in meaningful ways, reinforcing accountability, equity and organizational excellence. Because of this long-standing commitment, differentiation compounds over time, further rewarding consistent high performance.
Beyond compensation, employee recognition is deeply embedded in our culture. We offer both formal and informal recognition programs that celebrate contributions at all levels — from peer-to-peer acknowledgments to enterprise-wide awards highlighting innovation, compassion, and clinical excellence. These programs help ensure that high performance is visible, valued, and reinforced across the organization. Each May, we further elevate this commitment through a dedicated celebration of our workforce — this year themed One Team Empowered by Extraordinary People.
Equally important is our commitment to employee development and career growth. We invest in leadership development, clinical advancement pathways, and continuous learning opportunities that enable employees to build skills and advance within Scripps. High performers, in particular, benefit from targeted development experiences sponsored by our CEO, including programs such as Scripps Employee100, Scripps Frontline Leader Academy, and Scripps Leadership Academy. These initiatives prepare individuals for expanded roles and leadership opportunities, strengthening both engagement and our internal talent pipeline.
Lisa Abbott. Chief Human Resources Officer of Boston Children’s: Boston Children’s Hospital has worked hard to implement a merit-based payment system, where we calibrate our talent and strive to channel more merit dollars to our highest performing employees. We believe it is demoralizing to use a “peanut butter approach.”
We also have built out a very strong total rewards approach, which recognizes the need to meet employees where they are. Development and engagement mean different things to different people. Pay matters, but so does great health insurance, a solid retirement program, and development at all levels. Our approach aims to recognize place in life and career and offer appropriate investment based on that.
Matthew Love. President and CEO of Nicklaus Children’s Health System (Miami): In today’s pediatric healthcare environment, compensation alone is not enough to attract and retain exceptional talent. At Nicklaus Children’s Health System, in addition to a month celebrating our employees called September to Remember (S2R), our total rewards strategy combines competitive compensation and performance-based recognition with benefits that support the overall wellbeing of our workforce, including strong retirement offerings, wellness resources, paid leave, flexible PTO options and family support benefits. Our team members are at the center of every child’s care experience, and investing in them is essential to sustaining the culture of excellence our patients and families deserve.
Maulik Joshi, DrPH, President and CEO, and Scott Salzetti, Vice President of Team Member Services at Meritus Health (Hagerstown, Md.): At Meritus, we believe recognizing performance and living our values go hand in hand. While we provide broad-based increases to support our entire workforce, we also intentionally recognize approximately 20% of employees who consistently perform at the highest level and exceed departmental and organizational goals. In addition to financial rewards, these top performers may be considered for expanded leadership opportunities, specialized training and development programs, and succession planning initiatives across the organization.
Tina Jackson. Chief People Officer of Beaufort (S.C.) Memorial Hospital: Balancing broad-based workforce investments with the need to recognize and retain high performers is a major factor that healthcare organizations are facing now. There is a clear need to invest across the workforce, ensuring market competitiveness, financial stability, and access to benefits that support employees. Those investments build the foundation for engagement and trust, particularly post pandemic and the workforce shift we’ve identified.
At BMH, we are being more intentional about strengthening the integrity of their performance management processes to ensure that merit increases truly reflect impact. The risk of “peanut butter” approaches to compensation is that they dilute the value of performance and make it harder to retain top talent in an increasingly competitive market. At BMH, we are reinforcing clear, consistent evaluation standards that allow for meaningful differentiation in performance ratings, and we are expanding the definition of reward beyond base pay.
Development opportunities, leadership pathways, and targeted retention strategies are becoming just as critical as compensation in retaining high performers. What we find is that it ultimately comes down to transparency and alignment. When employees understand how performance is measured, how decisions are made, and how they can grow within the organization, it creates a culture where both broad-based investment and differentiated recognition can coexist.
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