Use More Frequent Rewards to Improve Healthcare Employee Retention

April 1, 2021
April 1, 2021

This blog post is the second of four excerpting our article, It Pays to Overhaul Compensation: Boost Retention and Operational Efficiency.

When healthcare organizations spend too much time on compensation due to a lack of systems are hours that managers could spend far better by talking to employees, soliciting input, and engaging strategies for a more streamlined and touch-heavy compensation program. For instance, according to Deloitte’s 2018 Global Human Capital Trends report (Agarwal, et al, 2018), there are three areas where rewards, or compensation strategies, are out of line with employee desires:

  • Annual vs. ongoing rewards programs
  • Focus on traditional workers and traditional benefits
  • Not seen as “fair”

The report concluded that an annual rewards program around raises, bonuses, and other incentives was not optimal. More frequent rewards, be those in the form of money or other compensation elements, were found to keep employees as much as eight times more engaged than those who receive annual compensation or bonuses.

Incorporating the Needs of a Diverse Workforce When Managing Compensation

Current programs often do not factor into the needs of a diverse workforce, which often fall outside mainstream benefits such as health insurance, sick leave, and overtime pay to include flexible hours, training and development, and personalized achievement recognition. And lastly, employees report that, even if their compensation is standard to the industry, they feel that the process for setting salaries, raises, and incentives is political or worse yet, arbitrary.

Avoiding the Heavy Costs Involved in Turnover

Put all together, it’s a recipe for early exits, particularly in healthcare where there is intense competition for qualified employees, especially nurses. And when those employees leave, there’s a cost. A recent Colosi PayScale BenchMark Report (2015) revealed that:

  • The healthcare turnover rate has increased 27 percent in the past 5 years.
  • The average time to hire has nearly tripled in the past 5 years, from 36 to 97 days.
  • For medium and large-scale employers, those with more than 500 employees, pay was the No. 1 reason for turnover.
  • More than 25 percent of employees cited seeking higher pay elsewhere as the reason they left their job.
  • 63 percent of healthcare firms surveyed cited retention of top performers as the top compensation objective.
  • RN turnover costs, on average for hospitals, is $4.9—$7.6M per year.

This data, and much more, points out the disparity between the existing annual review structure and employees’ desire for more frequent feedback. While many companies are embracing more frequent reviews, such as those held as a part of rounding practices, they are not tying compensation to those efforts. According to Deloitte, 20 percent of companies are giving workers performance ratings more than once a year, but only 9 percent are adjusting salary at that pace. And even when they do review compensation, they are using programs aligned with the strategies Holbert referenced, ones that are built in a rigid manner to only focus on experience and tenure vs. satisfaction and other intangibles that might be part of the review process.

The full article also advises healthcare leaders to:

  • Begin Thinking About Compensation Strategically
  • Swap Unwieldy Spreadsheets for a Compensation Management System
  • Use Technology to Untangle a Complex Issue


Agarwal, Dimple, Josh Bersin, Gaurav Lahiri, Jeff Schwartz, and Erica Volini. “2018 Deloitte Global Human Capital Trends.” 2018. Accessed July 13, 2018.

Download the article here.