Compensation / Salary

It is important to review health care employees’ salaries from time to time to ensure wages are competitive with other health care organizations and with jobs in other sectors, such as retail and manufacturing. Competitive wages not only assist in recruiting qualified employees, but also aid in retaining current employees.
The following should be reviewed to ensure pay scales are appropriate for each position within an organization:

  • Review job descriptions for accuracy and completeness
  • Compare to other positions within similar organizations
  • Assess if the proposed pay scale is comparable and competitive to similar organizations
  • Research median wages using resources, including the U.S. Bureau of Labor Statistics
  • Use information from public-sector sites to review federal pay scales by locality to view state pay tables or state salary structures, such as the one found on the South Dakota Bureau of Human Resources’ website.
  • Review labor market changes that impact salary adjustments, such as unemployment rates and use of temporary staffing agencies
  • Review experience, credentials and length of employment when reviewing pay scales

SDAHO urges all our members to participate in our annual compensation and benefits survey. We collect turnover and vacancy information to add valuable information to your compensation and benefits planning. Members who complete the survey in its entirety receive access to the survey results. Data collection generally begins in January of each year, with the report results released in July. Contact SDAHO at (605) 361-2281 for more information.

Salary compression

It is also important to review employee compensation scales for salary compression. According to the Society for Human Resource Management, salary compression is “when the pay of one or more employees is very close to the pay of more experienced employees in the same job.” Another form of salary compression occurs “when employees in lower-level jobs are paid almost as much as their colleagues in higher-level jobs, including managerial positions.”

Salary Increases

Many different approaches can be used to determine an employee’s raise, including:

  • Performance/merit based systems
  • General cost-of-living raises for all employees
  • Review of compensation scales by looking at low, middle, and high ranges of performance and pay grades

Factors in determining a salary increase may include:

  • Employer’s current financial situation
  • Department’s budget
  • Employee’s length of service
  • Employee’s qualifications (education, certifications, etc.)
  • Similar wages for comparable positions
  • General economic conditions (cost-of-living)
  • Benefits/incentives offered/not offered with a position.

Did You Know?

2% - 4%

Annual salary increases have been modest, between 2 percent and 4 percent, yet individuals who change jobs often see a raise at a much higher percentage. The Society for Human Resources Management (SHRM) reported that nearly ⅔ of employees prefer a promotion rather than a raise.