How You Can Use Market Adjustment To Retain Top Nursing Talent

Attracting and retaining talented nurses creates an ongoing challenge for nurse recruiters and HR professionals, especially during a nursing shortage.

Pulling out all the stops to stay ahead of the game and remain fully staffed is essential. One strategy for you to remain competitive when recruiting and working to increase retention rates is by updating salaries with a market adjustment.

What is a market adjustment?

Market adjustments are specific to compensation and are a means to reflect where current employees are with regards to salary, relative to what the market is paying for the same occupation, said David Twitchell, a member of the Society of Human Resource Management’s Special Expertise Panel and vice president of human resources at Catholic Charities in Manchester, N.H.

“Typically, the market reflects an average of salaries based on a number of institutions being surveyed in that market,” he said. “Questions for recruiters to consider include, ‘Are we behind the market, on market or leading the market?’”

In addition to general recruiting and decreasing overall turnover, a market adjustment can help when you hire and work to retain specialty nurses.

“In some parts of the country, some employers and hospitals in particular hit the panic mode when specialized nurses with decades of experience leave, especially from areas such as the ER, OR and ICU,” said Joanne Spetz, PhD, professor at the Philip R. Lee Institute for Health Policy Studies at the University of California, San Francisco.

When seasoned nurses leave, you might want to fill those positions with other nurses with lots of experience.

During a shortage, some recruiters will offer hiring and retention bonuses, along with pay increases,” Spetz said. “This is where market adjustments come into play and recruiters need to be aware of this.”

Routinely compare your salaries to the going rate

There are no set rules on the frequency of analyzing and implementing a market adjustment when recruiting new hires in nursing.

“Market adjustments should be considered at least annually, at a minimum,” Twitchell said. “Performing market adjustments can be done by hiring an outside consultant to survey salaries of competing institutions to determine how their pay practices compare to yours. You can also purchase surveys that have already been done to make this determination.”

Examining and implementing a market adjustment for existing staff also is essential.

Trisha Zulic, SHRM-SCP, state director-elect with the California Society for Human Resource Management, said, “If you begin to lose high performers that ‘once upon a time’ loved the culture, it’s time to take a closer look and see what has changed. Also, if you’re hiring because you are desperate, you can cause a culture shift that might cause high performers to exit.”

Understanding what your market pays its nursing talent while remaining proactive to reduce your future costs is important.

“Staying on top of the market makes sense,” Spetz said. “Engaging in cost avoidance is good practice — paying out money now, can help save money later, whether paying out higher salaries, or sign-on or retention bonuses.

When a nurse resigns, the replacement cost ranges from $40,000 to $100,000, according to Spetz, depending on that nurse’s position and the market.

“It costs time and money to post a job and recruit for a replacement, and the vacant position will likely need to be filled in the interim with registry temps or travelers,” she said.

At some point, nurses will leave — even the ones who are happy with their schedule or manager.

“That’s why exit interviews can be helpful, to ask the question, ‘Why are you leaving?’” Spetz said.

Questions recruiters should ask nurses during exit interviews include:

  • Why are you leaving your position with us?
  • Did you receive a sign-on bonus at your new job?
  • Did you receive a better benefits package at your new job?

You might find out that you are paying your nurses less than a competitor. “Or perhaps, you may need to offer a lucrative retention bonus to remain competitive and decrease turnover,” Spetz added.

Reasons nurses leave and how to address them

While targeted use of market adjustments can increase the effectiveness of recruitment and help reduce nursing turnover, “they are not the end all, be all,” Twitchell said. “Incentives, bonuses, differentials, benefits, the work environment, autonomy and nurse-to-patient ratios are all contributing factors too.”

In addition to seeking more compensation or benefits, Spetz said, nurses often resign because they don’t like the unit’s culture or their manager. Their manager may not support their staff or offer professional growth opportunities.

“Nurses don’t like when they lose fellow staff members. When nurses resign, it can lead to more nurses resigning as a result of staff shortages,” she said. “Staff shortages create a difficult work environment and can negatively impact patient care and outcomes. Retaining staff is good for staff and patients.”

Succession planning is imperative, according to Spetz, especially for units like the OR, ER and ICU.

“One strategy to help fill specialty units with seasoned nurses is to offer these positions and additional training to the experienced bedside nurses who are already within your organization, then hire new grads for training and working on med-surg units,” he said. “Offering opportunities to your current staff can help to develop their skills while also increasing staff loyalty to the organization.”