Parkland Health Sets Standard for Entry Workers’ Pay

By Debra Wood, RN, contributor

June 20, 2014 - At a time of financial uncertainty for hospitals, Parkland Health & Hospital System in Dallas has raised its hourly minimum wage to $10.25 for entry-level workers, paying for it with funds set aside for executive bonuses. Many see this action as setting a new standard in the fair wage debate raging in the United States, recognizing the value every employee plays in ensuring a good patient outcome.

“The reason Parkland’s senior leaders recommended this and Parkland's board of managers agreed is because it's the right thing to do, and it aligns with our new talent management strategy,” said Jim Dunn, PhD, Parkland's executive vice president and chief talent officer. That strategy incorporates a program to focus on employee attraction, development and retention, including creating career pathways.

Jim Otto: Parkland Health raises minimum wage, stirs discussion.
Jim Otto expects Parkland Health’s actions will have boards and compensation committees across the country talking about the decision and wages.

Dunn explained the rational for increasing the health system’s minimum wage base as twofold.

“It recognizes the importance of all levels of employees in fulfilling our mission, and it strengthens our recruitment and retention efforts toward maintaining a higher caliber of staff inside of Parkland,” Dunn said.

Jim Otto, senior principal with Hay Group, headquartered in Philadelphia, called it “a huge public relations positive” for the hospital, and he thought it would help Parkland recruit good candidates and keep good employees.

In addition to boosting morale and attracting new staff members, increasing compensation for a cadre of employees with direct patient contact could improve patient experience, added Jason Hanold, CEO and managing partner of Hanold Associates in Evanston, Ill.

“It’s a great positive message,” Hanold said. “It goes a long way as a gesture and makes a meaningful difference to those earning a minimum wage.”

Hanold added that with an engaged workforce, Parkland might need fewer workers. When people have an ownership mentality, he explained, they will do more during the same amount of time than an employee who feels undervalued.

Jason Hanold: Healthcare executives may desire Parkland Health’s culture.
Jason Hanold believes the Parkland plan will attract not only entry-level employees but also healthcare executives who desire a workplace culture that values everyone.

Funding for the wage increase--which amounts to about $350,000 annually and will affect 230 employees, primarily in environmental services, laundry and dietary jobs--will come from money designated for executive bonuses.

“We believe it's important that our senior leaders have an investment in our front-line employees, especially the lower-income employees,” Dunn said. “Each year, the first pool of funds earned by executives as part of the pay-for-performance plan will be dedicated to increasing the minimum salary for those low-income workers rather than be used as part of the incentive plan.”

Otto expects Parkland’s actions will have boards and compensation committees across the country talking about the decision and the broader issue of how people are paid.

“It’s definitely going to get the attention of other healthcare systems and get boards to think where their pay stands after what Parkland decided it needed to do,” Otto said.

Hanold is not sure if this action will catch on in other areas, but believe it could move the pay scale in Dallas hospitals and attract people from other industries to healthcare.

Parkland employees have been very excited about the news, Dunn said.

“We've had a couple of individuals who have said this goes to show that hard work pays off, and one told us that now she will be able to get a place of her own,” Dunn reported. “Others have commented that they won't have to work as much overtime and will be able to spend more time with their families.”

The system’s healthcare executives also have been supportive, Dunn said, indicating he has not heard a negative comment about the plan from anyone.

“They agree, it’s the right thing to do for Parkland,” Dunn added.

Otto cautioned that it might affect recruitment at the highest levels, if maximum pay ends up less than at competitors. However, he added that some prospective candidates might consider the plan a positive.

“I think this does more to attract senior leaders,” Hanold added. “It demonstrates a selfless orientation by the executive team and their care for employees at all levels. It’s about culture.”

Hanold reported that many executives outside the healthcare industry are interested in a noble purpose, such as saving lives or helping people become well. Additionally, the most distinctive leaders aim to build followership.

“There is a lot of benefit in building their Parkland brand,” Hanold said. “When you see executives giving back, that creates followership.”

Since announcing the new policy, Parkland officials also have received comments from people all across the country, calling or writing to congratulate Parkland for taking the initiative.

“We certainly didn’t expect the response we’ve received,” Dunn said. “Not only is it the right thing to do, it makes sense. We are proud to be part of this dialogue.”

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