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Pay allocations by hospital administrators: an empirical analysis
S P Deshpande1, P P Schoderbek
1Haworth College of Business, Western Michigan University, Kalamazoo.
Hospital & Health Services Administration
|October 1, 1992
Summary
Hospital administrators consider performance, skills, replaceability, turnover risk, and salary when making pay-increase decisions. However, their stated priorities don't always match their actual decision-making process.
Area of Science:
- Health Services Research
- Organizational Behavior
- Human Resource Management
Background:
- Understanding the factors influencing pay-increase decisions in healthcare is crucial for effective resource allocation and staff retention.
- Hospital administrators' decision-making processes are complex, involving multiple employee attributes and organizational considerations.
Purpose of the Study:
- To investigate the key factors influencing hospital administrators' pay-increase decisions using a policy-capturing methodology.
- To examine the congruence between administrators' stated importance of decision factors and their actual decision-making behavior.
Main Methods:
- A policy-capturing approach was employed, analyzing 816 pay-increase decisions from 17 hospital administrators.
- Hypothetical employee profiles were presented, varying in performance, specialized skills, replaceability, turnover potential, and current salary.
- Regression analysis was used to determine the weight assigned to each factor in decision-making.
Main Results:
- Performance, specialized skills, difficulty in replacement, potential turnover, and current salary were all significant factors in pay-increase decisions.
- No significant interaction effects were found between the decision factors for any administrators.
- Administrators' explicit rankings of factor importance did not strongly correlate with the regression weights derived from their decisions.
Conclusions:
- Healthcare pay-increase decisions are influenced by a consistent set of employee and organizational factors.
- A discrepancy exists between administrators' perceived and actual weighting of factors in pay decisions, highlighting potential biases or cognitive limitations.
- Findings have implications for improving fairness, transparency, and effectiveness in healthcare compensation practices and administrative training.