What is the labor market…and will it take my debit card?

 In Compensation, Competitive Data

What exactly is the labor market, and what does it mean to a health center manager?  As managers, we want to know what the labor market is, so we can determine what data we need to collect.  The data will tell us what we have to pay in order to attract, retain and motivate the employees we need to get our work done.  But it goes a little bit deeper than just what we HAVE to pay — it’s what we SHOULD pay.  The labor market gives us a general idea, and we need to adapt that information to fit our business model.

Let’s start with the simple answer — the labor market we are most concerned with is the place we go to find people to work for us.  Something becomes clear pretty quickly.  We don’t just have one “labor market” to deal with; what we really have is a different labor market for every single job in our organization.  If you don’t believe that, think about how you recruit, and the candidates you find the most attractive; it’s quickly apparent that how you hire for front desk staff is very different from how you hire for medical providers.  There are several variables that come into play when identifying the labor market for a particular job, and it helps to ask yourself some basic questions:

  • Geography – where are you likely to look for employees?  The geographic recruiting area takes into account the scarcity of skill sets and the likelihood that you would pay to relocate someone.  For entry-level and low-skill jobs, you’re likely to look in an area representing a reasonable commuting distance from your office.  Your recruiting will increase as the complexity of the jobs increase, and the area may well be national for the CEO or other senior managers.
  • Industry – is there anything about the skills for the job that requires specific industry knowledge?  For many administrative roles (e.g., accounting, human resources) skills are relatively transferable, and you can look at people regardless of where they’ve worked.  That means that while we might look only at health care information for medical professionals, we can cast a wider net for data on many other jobs.
  • Resources – The labor market is further narrowed when you consider that regardless of where you might hire or lose employees, you can’t, and shouldn’t, compete with some of these organizations.  For most positions, particularly at management and executive levels, there is a direct relationship between the size of the organization and its pay.  Comparing pay for health center nurses to pay at large hospital systems is simply not realistic, because those systems have more resources and a different business model.  Similarly, if there’s an automotive plant in town, you are not going to attempt to compete with them for janitorial help.

Unlike many other industries, there is another factor we have to consider in determining the nature of the labor market in migrant and community health centers.  While there are many differences from health center to health center, all share a similar business model and have similar restrictions.  While there may be very little overlap between service areas, pay data from similar-sized health centers is much more useful than information from the hospital down the street.

Defining the market is the essential first step in determining the sources of data to be used in a comprehensive pay administration program.  In later posts, we’ll discuss how to use that data.