By Thomas P. Flannery, PhD, and Bill Dixon, senior client partners for Korn Ferry Hay Group’s Executive Pay & Governance practice.
They are one of highest positions in a health system or hospital, and are the linchpin between the doctors and nurses and the rest of the clinical enterprise. They can reduce medical errors and make the patient process go smoother. Indeed, the chief nurse’s efforts may well save your life someday, both clinically and financially.
And yet, according to new Korn Ferry compensation data, they remain caught up in the gender pay gap issue that still nags the healthcare industry. As it is, nearly 90% of U.S. nurses are women but make 10% less than their male counterparts. But the issue is even more glaring with chief nursing officers, who are typically women and are often the lowest paid senior officers of a healthcare organization, usually earning 30% to 50% less than other top healthcare executive roles (excluding CEOs and COOs). That discrepancy has been there for decades.
“It is disappointing CNO compensation continues to lag behind other senior health care executives within the same organization,” says Maureen Swick, CEO of the American Organization of Nurse Executives and chief nursing officer of the American Hospital Association. “As leaders of the largest clinical workforce in hospitals and healthcare systems, CNOs are responsible for driving quality and performance improvement, as well as bringing nursing and patient care issues to the boardroom.”
The importance of the role is hard to overstate. They are typically a key member of the executive team that must implement the CEO’s strategic plans throughout the organization. What’s more, the CNO is accountable on a 24/7/365 basis for the delivery of effective care. CNOs are often asked to create and manage programs that help improve collaboration among doctors and nurses, increase patient satisfaction, reduce medical errors, ensure patient safety, and improve outcomes. Nurses are the primary touchpoint for the patient experience, so CNOs are vital to producing organizational results, including financial success.
Yet the person most accountable for the largest number of skilled professionals directly delivering patient care often gets paid less than the person who decides what computers to buy. If you ask nursing leaders about the lagging pay, the response is usually they were told the “market establishes the price.” Many of those leaders will also say that the “market” itself has a historical gender bias.
On the plus side, government is taking on the broader role of gender pay equality. California passed an “equal pay” law that goes into effect this year. In Massachusetts, similar legislation has been enacted and will soon go into effect, and the discussion is happening more and more at the national level.
But in the end, organizational leadership must play the key role. Market factors are just one of a number of things that boards and CEOs should consider when they determine pay. Scope of responsibility, strategic contribution, and other factors are major considerations when it comes to compensation. In short, pay the chief nursing executive for the value of the role to the healthcare organization, not just what the market dictates, which by itself may be biased. Healthcare organizations that don’t do this will likely face a competitive disadvantage. Making a shift on nurse leadership compensation is no different than what healthcare organizations must do when they bring in the best talent from outside the health industry.
Boards and CEOs do challenge traditional assumptions about pay while understanding that these decisions need to be made within the context of the organization’s ability and willingness to pay. Abandoning traditional pay rules (or biases) is difficult. However, creating new pay standards for CNOs can help produce the transformation of healthcare. It just takes leadership to make that happen.