Retention and Compensation

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Compensation & Retention |

Managing Human Resources |

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Table of Contents

COMPENSATION 2

INTERNAL VS EXTERNAL EQUITY STRATEGY 2

EXTERNAL EQUITY: IMPACT ON RECRUITMENT AND TURNOVER 3

INDIVIDUAL PAY DIFFERENTIATION AND VARIABLE PAY STRATEGY 4

RETENTION 5

REGISTERED NURSE TURNOVER AND SHORTAGE CONCERNS 5

RETENTION STRATEGIES 6

CONCLUSION 8

COMPENSATION

Humana’s approach to equity is as important as the actual pay programs it implements. Humana typically emphasizes external equity in the design of its compensation structures. This focus on external equity enables Humana to develop compensation structures and programs that are competitive with other companies in appropriate labor markets. In addition to focusing on external equity, Humana focuses on individual equity as well, which improves the company’s ability to attract, retain, and motivate its employees.

INTERNAL VS EXTERNAL EQUITY STRATEGY

External equity takes precedent over internal equity for Humana’s pay structure for a number of reasons. In discussion with Humana’s Chief Human Resources Officer, Tim Huval, he stated that the biggest cost to an organization like Humana is employee turnover. In addition to the internal value proposition, culture, and employee centered work environment, Humana believes that paying the same or better than your competition is a key component to retaining quality talent. Humana has a strict policy against individuals discussing their salary and this policy has been heavily enforced for years. Discussing your salary, outside of a conversation with your direct leader, is unacceptable and is likely to result in termination. As a result, internal equity rarely becomes an issue.

Another reason Humana focusses on external equity is because of the relative difficulty of defining the standards for internal equity in a large, complex organization like Humana. Tim believes that because of the high degree of subjectivity, Humana runs the...