A Dallas hospital decided not to pay executive bonuses and use that money instead to raise minimum wage for its workers to $10.25 an hour.
About 230 entry-level employees at Parkland Health and Hospital System will be getting a raise next month. The hospital’s board also plans to begin assigning bonuses to executives according to performance.
The lowest paid employees currently make $8.78 an hour. Minimum wage in Texas is the same as the federal minimum wage, $7.25 an hour.
The executive bonus pool, given to the hospital’s 60 vice presidents and top executives, is between $3 million to $5 million annually.
Dr. Jim Dunn, the hospital’s executive vice president and chief talent officer, says the hospital hopes to boost worker morale as well as provide a living wage. The move will cost the hospital about $350,000 a year.
“We really want, in any way possible, to break down any gaps or anything between the top leaders and those who are closest to our patients,” Dunn told Modern Healthcare. “We feel like it’s the right thing to do.”
Dunn said most of the employees affected work in environmental, linen and dietary services.
The hospital’s board also approved a Pay For Performance plan, which sets incentive standards for executives based on quality, service, people and operations.
“As it relates to the minimum wage increase, the first cut to fund such a plan will come off the backs of the leader,” Dunn said. “One of the important things to understand is it’s not a bonus program. It’s quite the opposite in that it takes the full amount of an executive would likely earn in the marketplace and places a portion of the income at risk.”