Employee Compensation at Health Insurers Poised for Modest Growth in 2011, according to Hay Group Survey

PHILADELPHIA--(BUSINESS WIRE)-- Hay Group’s 2010 Health Insurance Survey, released today, had some positive news for health insurance employee compensation in 2011. Median salary budget increases (the total available budget to invest in employees through salary) for 2011 are expected to reach 2.9 percent for executives and 3 percent for all other employee levels. This is a slight increase from last year’s survey that reported median salary budget increases of 2 percent for executives and 2.5 percent for all other employee levels. Merit increases, which are one piece of the total salary budget, are also expected to climb in 2011 by up to 0.5 percent depending on the employee level.

“This added merit budget increase, while relatively small, will allow organizations to provide raises for employees who exhibit added value, which is especially important as companies plan for major changes in the wake of healthcare reform. However the industry may transform, these organizations are clearly stating they will invest to keep their best people,” said CJ Bolster, National Director for Hay Group’s Healthcare Practice.

Hay Group’s survey also found that 48 percent of organizations have not reviewed their performance-based employee incentive plans in five to ten years, compared to the cross-industry standard of three to five years.

“With so many questions around the new payment structure resulting from healthcare reform and the economic recovery, health insurance organizations are working to define what ‘performance’ will mean in the future,” says Cheryl Mikuls, Vice President with Hay Group. “As the industry becomes more aware of the impact of these variables on their business performance, reviewing incentive plan design and metrics will be an important initiative. Companies will clearly want to ensure employees focus on driving the performance of the organization by developing metrics that are aligned with the overall business strategy and providing payout opportunities that are meaningful to the employees.”

All participants in Hay Group’s 2010 Health Insurance Survey report having a formal annual incentive program, demonstrating a universal acceptance of “at risk” pay among health insurance organizations. Performance measures for executives, middle management, supervisory and clerical positions were based on a blend of factors and vary based on level. Overall, they primarily focused on operating income, product quality, customer satisfaction and individual goal achievement across the levels.

Looking at health insurance organizations’ salary structure adjustments (the framework in which salaries are based), Hay Group’s study found a noticeable drop from previous years. In fact, median salary structure adjustments are at their lowest point in ten years. In 2010, respondents are planning an average salary structure increase of 2 percent, compared to a high of 3.1 percent in 2001 and a previous low of 2.7 percent in 2008. Salary structure increases are expected to remain at 2 percent through 2011 as well.

“This is a significant relevant reduction, and the overall indication is that employers are continuing to be cautious in both moving salary structures as well as providing salary increases until they have a clear understanding of industry direction,” said Mikuls.

Study depth and methodology

The 2010 Health Insurance Survey has been conducted by Hay Group for more than two decades and covers compensation for approximately 400 executive, management and staff positions. The 2010 Health Insurance Industry Compensation Report includes data from 66 health insurance and Blue Cross Blue Shield organizations. Nearly two-thirds of the participating organizations are not-for-profit organizations. Salary data for approximately 88,000 employees was provided by these organizations.

Organizations match their positions to the job descriptions provided by Hay Group. For senior level management positions, additional scope and dimension data (that measure additions or deletions to the basic content of the benchmark jobs) are collected for each position. These additional data support differentiations and comparisons of similar sounding yet unequal positions across organizations.

About Hay Group

Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 86 offices in 48 countries, we work with more than 7,000 clients around the world. Our clients are from private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. For more than 60 years, we have been renowned for the quality of our research and the intellectual rigor of our work. We transform research into actionable insights. We give our clients breakthrough perspectives on their organization and we do it in the most efficient way to achieve the desired results. Our focus is on making change happen and helping people and organizations realize their potential.

For more information on Hay Group’s healthcare practice, services or this study, please contact Colin Owens at H[email protected] or 800-776-0486.



CONTACT:

Hay Group
Colin Owens, 800-776-0486
[email protected]

KEYWORDS:   United States  North America  Pennsylvania

INDUSTRY KEYWORDS:   Health  Professional Services  Consulting  Human Resources  Insurance  General Health  Managed Care

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