HA530 Unit 7 Merged Nurse Pay Structure Analysis Example

Same Work, Different Pay, One Merger: A Compensation Analysis Designing a Single Pay Structure for 1,040 Non-Represented Nurses at Three Hospitals of a Composite Merged System, Placing Every Nurse on It and Pricing the Move

[Student Name]

Purdue University Global

HA530: Human Resources for Health Care Managers

Unit 7 Compensation Analysis

[Instructor Name]

[Date]

The system, the nurses, the rates and the costs are composite and bracketed; the analysis is a course model, not pay advice.

The Two Legacy Plans

Plan A, at the flagship hospital: open ranges with a minimum, midpoint and maximum for each grade; increases based on merit ratings; [640] nurses. Plan B, at two community hospitals: a step scale with one step per year of experience up to [20] steps; [400] nurses. A staff nurse with ten years of experience earns about [$46.80] an hour under Plan A and [$43.10] under Plan B. Nurses who float between hospitals see the difference on their pay stubs. Two plans that each made sense on their own now tell nurses that the same work is worth different amounts depending on the building.

Market Data

Regional survey data for staff registered nurses show a 25th percentile of [$38.90], a median of [$44.60] and a 75th percentile of [$51.20]. The system's goal, set by leadership, is to pay at the market median for nurses with average experience.

Design Choices

1. Structure: a single range per grade, with placement by years of relevant experience to answer nurses' preference for predictability, and merit increases within the range to reward performance.

2. Ranges: staff nurse minimum [$38.50], midpoint [$45.00], maximum [$54.00].

3. Placement: experience-based placement points, roughly [$0.80] per year for the first ten years and [$0.40] per year after, capped at the maximum.

Compensation texts note that such hybrid designs combine the internal consistency of steps with the flexibility of ranges, at the cost of more complex administration (Milkovich et al., 2020).

Placing Every Nurse

Each nurse's new rate is the greater of current pay or the placement point for their experience.

1. Below placement: [612] nurses, mostly Plan B, receive increases averaging [$1.95] an hour.

2. At or above placement and within range: [391] nurses keep current pay.

3. Above maximum: [37] nurses are red-circled, keeping their pay but receiving lump-sum rather than base increases until the range catches up.

Cost

Annual cost of moving [612] nurses to placement: about [$2.48] million, or [2.6] percent of the nursing payroll. Phasing over two years would reduce the first-year cost to about [$1.24] million.

Pay Equity Check

The federal equal pay provision bars sex-based pay differences for jobs requiring equal skill, effort and responsibility under similar conditions, allowing differences only when they rest on seniority, merit, output or another factor unrelated to sex (29 U.S.C. § 206, 2024). After placement, the analysis compares average pay for male and female nurses with the same experience and grade: the gap falls from [3.1] to [0.4] percent, within the explained range.

How Nurses Will Hear About It

Each nurse will receive a letter showing current pay, experience credited, the placement point and the new rate, with the date of any increase. Managers will hold small-group sessions to explain the rule, and a correction process will let nurses submit missing experience records within [60] days. Explaining the rule matters as much as the money: a fair structure that nobody understands can still feel arbitrary.

Why It Matters for Retention

Pay is one of several factors linked to turnover, alongside job satisfaction and alternatives in the labor market (Griffeth et al., 2000). Visible inequity between hospitals is a particular risk in a merged system, where nurses float and compare.

Alternatives Considered

Adopting Plan A everywhere would reward performance but leave many Plan B nurses below experienced peers until merit increases caught up, which could take years. Adopting Plan B everywhere would be simple and predictable but would remove managers' ability to reward strong performance and would compress pay for the flagship's most experienced nurses. The hybrid keeps the predictability nurses at the community hospitals value and the merit element the flagship's managers rely on.

Effect on the Unionized Hospital

The fourth hospital's nurses are covered by a collective bargaining agreement with its own scale. The new structure does not apply to them, but the union will compare it with its contract at the next negotiation. Leaders should expect that comparison and plan for it.

Administration

Human resources will maintain experience credit rules, review ranges annually against the survey and audit placements each year for errors and equity.

Recommendation

Adopt the single structure, place nurses over two years with the larger increases first and communicate each nurse's placement in writing with an explanation of the rule.

Limits

Survey data may lag the market. Experience records from Plan A are incomplete for some nurses and will be verified before placement.

Conclusion

A single structure ends unequal pay for equal work across the system's hospitals at a cost of about [2.6] percent of nursing payroll, with a phased option and an equity check built in.

References

Griffeth, R. W., Hom, P. W., & Gaertner, S. (2000). A meta-analysis of antecedents and correlates of employee turnover: Update, moderator tests, and research implications for the next millennium. Journal of Management, 26(3), 463-488. https://doi.org/10.1177/014920630002600305

Milkovich, G. T., Newman, J. M., & Gerhart, B. (2020). Compensation (13th ed.). McGraw-Hill Education.

29 U.S.C. § 206 (2024). https://www.law.cornell.edu/uscode/text/29/206