U.S. Base Salary Increases for Healthcare Employees in 2011 Lag Other Industries, New Hay Group Survey Finds

PHILADELPHIA -- (BUSINESS WIRE) -- January 10, 2011 -- U.S. healthcare employees can expect an average base salary increase of 2.6 percent in 2011, according to a new Hay Group survey released today. That's up from base salary increases of 2.3 percent reported in 2010 and slightly below increases of 2.8 percent reported across all industries for 2011.

"The healthcare industry did not see salary budgets fall until 2009, while other industries felt the effects of the recession much sooner, lowering salary budgets as early as 2007," said Ron Seifert, vice president and executive compensation practice leader for Hay Group's healthcare practice. "So, while healthcare is still 0.2 percent behind other industries, it seems to be rebounding at a faster pace after taking a deeper dip in a much shorter timeframe."

According to Hay Group's survey, 18 percent of respondents across all industries reported that they will maintain a salary freeze across all levels in 2011 to reduce compensation costs, while only 4 percent of respondents in healthcare reported an across-the-board freeze on salaries.

"Healthcare providers have felt the pinch, but salary budgets are beginning to move upward, mirroring the slow ascent we are seeing in the broader economy," added Seifert. "Interestingly, healthcare salary trends are also starting to track those of other industries, which we haven't seen for at least a decade."

Fewer healthcare executives will see their salaries frozen in 2011, with 8 percent of organizations reporting a freeze of executive pay. That's compared to just over 20 percent of organizations that reported freezing executive pay in 2010. Hay Group's survey also shows a parity of planned salary increases for healthcare employees in 2011 with both executives and all employee groups seeing a 2.6 percent increase.

"With executive salary budgets rising at the same level as staff this year, it's clear that boards are concerned about public perception of executive pay," said Seifert. "However, it's critical that compensation committees balance their concern of scrutiny with their need to attract and retain the best possible talent to lead their organizations."

Salary increases for physicians are still lagging slightly at 2.3 percent, while nursing will see a 2.7 percent salary increase in 2011. High performers/potentials will see less than 1 percent more than all employees with 2.8 percent planned base salary increases for 2011.

"With limited budgets, healthcare organizations are still resistant to differentiate pay for top and average performers," said Seifert. "However, if healthcare organizations want to retain high performers and high potentials, they need to treat them fairly - which does not always mean that everyone gets the same amount."

About the survey
Hay Group's forecast results are based on the latest data available from Hay Group's U.S. database, provided by more than 486 U.S. organizations in November 2010 in the general industry survey, and 90 hospitals and health systems of varying size, structures and locations participating in the healthcare salary survey. Typical respondents to the survey include compensation professionals in the Human Resources departments. Hay Group's core compensation database represents compensation practices for almost 3,000 companies and over 6 million employees.

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.