Structuring Benefits to Motivate Employees

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.)

Assumptions:

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 employees to 60th %-ile                   3.0

Min Wage       Increase Min Wage to $12/hr                                                    1.5

                         Increase Min Wage to $15/hr                                                    2.5 (5% lay off)

PTO                 Increase PTO to 7 days/yr                                                          1.5

                        Increase to 10 days/yr                                                                 2.5

                        Extended FMLA (12 weeks paid)                                                2.5

Insurance       Add spouse/dependent coverage                                           2.5

                        Add life insurance upgrade                                                       0.5

401k                Add 3% match                                                                             2.5

                        Add 6% match                                                                              3.5

FSP                   Flex Spending Plan - includes      

                                Dental, optical, meds                                                          1.0

Education       Tuition supplement - current semester                                 1.5

                        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                               3.5      

Required: Describe in detail the total compensation package you will recommend to the CEO, keeping your total cost at or below 12.0 Relative Cost points. If you can bring a plan that is 11.0 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 3.0 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.). 

Word limits – 800 word minimum, 2,200 word maximum