The situation at Twin Oaks Hospital in Lexington, Co is very interesting. The nearby Lexington Memorial Hospital, a public facility, has just agreed to demands from their nursing and clerical staff to increase wages five percent. They further agreed to launch a job evaluation program which would evaluate the nursing and secretarial jobs based on comparable worth. This has caused the staff at Twin Oaks to demand similar wage increases since before Lexington Memorial increased wages 5%, compensation between the hospitals were very similar. This leaves Twin Oaks with the task of creating a plan that will keep their staff happy and keep them competitive with other hospitals in the area.
David Hardy, the director of personnel is in a dilemma over how to go about keeping Twin Oaks employees happy while remaining competitive in the market since the hospital is in the private sector. The main debate is over the comparative worth model for determining pay scale. Comparative worth would take a look at each job function and compare the value that each employee is contributing to the company, and then decide compensation based on the results. “Comparative worth is not the concept that women and men should be paid equally for performing equal jobs. Rather, comparable worth attempts to prove that employers systematically discriminate by paying women less than their work is intrinsically worth, versus what they pay men who work in comparable (equally valuable) positions--- and to remedy this situation.” (p. 301, Ivancevich) Twin Oaks has 350 employees, which includes 200 nurses and 40 clerical positions, both of which are almost exclusively women. Janet Sawyer gives the arguments for implementing a comparable worth model by stating that “Nationwide, there is a disturbingly large gap between the pay levels of predominantly male and female jobs. Consider that there’s no difference in the median education levels of men and women, about 12.6 years. Yet with the same median amount of education, women on average earn 40.8% of a man’s median pay.” She makes this argument believing that there are probably many disturbing gaps in pay within Twin Oaks hospital. The point to remember is that she is not advocating equal pay among the sexes within the same job, but pay based on comparative value between different jobs. In other words, if the value of one particular task is equal to another different task, the pay between those jobs should be very similar.
Janet’s argument is viable, but there are some points to take into consideration, and Charles Cooper presents three valid rebuttals to the system of comparable worth. One, he claims it would destroy the free market system. The market does not discriminate between genders, but on the basis of supply and demand, which determines a job’s worth. He’s basically saying that even though a truck driver may give the same value to the company as a clerical worker, the truck driver may be paid more since there are fewer truck drivers available than clerical workers. If the demand is the same for both, the job with more supply (clerical) would be paid less since there are more people who cold fill the position. Under the comparable worth format, both these jobs would garner the same wage, even though a good quality truck driver may be harder to find.
Second, Charles says there will be an issue with implementation. He claims that “comparable worth floats in a sea of subjectivity.” (p.323, Ivancevich) They would need to evaluate all jobs in the hospital to determine the value to be compared against. Determining the factors of calculating a job’s worth is very subjective, there is not too much that is objective and clear-cut. Plus, by implementing comparable worth pay may become equal among comparable jobs, but they may not be able to address their need to be externally competitive. They may be paying too much for a certain position according to the market factors.
Charles’ third concern is costs. They won’t really know how much it will cost until it’s underway, and the nationwide estimated costs of implementing these programs are $150 billion.
Janet gives some good ideas to satisfy these concerns; the best one, in my opinion, is to create a “taylor-made” program specifically for Twin Oaks Hospital. They could follow models that other companies have implemented and even see what Lexington Memorial has done at their hospital. Even though they are public they still need to operate efficiently. Twin-Oaks could set up a special committee to determine which factors will make up the value comparison. As to costs, Janet says that they could phase in new cost over time so it wouldn’t be a big hit all at once.
My recommendation would be to create a specialized committee as Janet suggested and create a program unique to Twin Oaks hospital. Charles’s concerns are viable and should not be ignored, although I think that a comparable worth program could help the hospital find problems they didn’t know existed, and then they could take steps to correct them. This doesn’t necessarily mean that wages would need to change if two separate jobs are found comparable in value. They could look at each issue differently and determine if wage gap is due to market factors or discrimination. Then the decision would follow. In other words, they don’t need to make an impulse decision if they see that there are gaps in equally valuable jobs. They could assess all factors. I can recommend they implement a comparable worth initiative because of this reason, it would give them a better foundation to make decisions and they would know if there are gaps due to discrimination, while still paying attention to market factors. Without a comparable worth program they would just be guessing and wouldn’t have a good basis to determine if there is a gap due to actual market factors or gender discrimination. I also like the idea of phasing in the costs over time. This will help keep the budget balanced and give them time to implement changes as necessary.
Ivancevich, John M., Human resource Management, McGraw-Hill, Third Edition, 2007.