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 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”
"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.
Treatment for anxiety and depression associated with improved heart disease outcomes