Determining Market Rate Salary in Nursing: 5 Tips

The high demand for qualified nurses coupled with the low supply of clinicians entering the workforce can make it difficult to hire and retain employees. One key factor that affects a nurse’s willingness to join or remain at an organization is their compensation. Unfortunately, it can be challenging to offer a pay rate that satisfies employees and stays within the operational budget.

Therefore, it’s essential that healthcare organizations research and determine an appropriate market rate salary to offer nursing staff. You may be wondering: What does “market rate” mean and why is it important in the context of healthcare?

In this article, we explain how market rate salaries are determined, review the importance of considering fair market value when calculating employee compensation, and list five best practices for establishing a fair nursing salary in your organization.

What Does Market Rate Salary Mean?

A market rate salary, similar to a fair market value salary, is the general amount that companies are willing to pay for employee services. Market rates aren’t set by individual companies. Instead, they’re composite figures that fluctuate based on economic changes and industry trends. In nursing, market rate salaries are determined by the:

• Cost of living in the area.
• Supply and demand of nursing professionals in the region.
• Role title.
• Experience and skill set required.
• Licensure and degree necessary for the role.

Why Is Offering a Market Rate Salary Important in Nursing?

Nurses who don’t feel appreciated by their employers often experience higher rates of burnout and job dissatisfaction. When employees feel undervalued and underpaid, they often leave their position or even the profession entirely. Hospitals spend an average of $56,000 on recruitment, onboarding, training, and temporary staffing expenses each time a nurse leaves their organization.

Staff discontent can also negatively impact patient care efforts. Organizations with significant nurse turnover experience lower patient satisfaction, higher mortality, and worsened brand image.

Certain elements like long shift patterns and stressful working conditions can affect nurse turnover and are outside of an organization’s immediate control. However, establishing a fair nursing wage is one way companies can directly improve retention efforts. Healthcare organizations that consider the market value of a job can:

• Recruit competitive and experienced nurses.
• Build trust between healthcare executives, providers, and patients.
• Experience higher nurse retention rates and satisfaction scores.
• Save on expensive travel nursing costs.
• Improve patient safety and care quality.

Establishing Your Nursing Salary: 5 Best Practices for Facilities

Once you understand the importance of offering a market rate salary in healthcare, you’ll want to ensure your organization offers a fair nursing wage to current and prospective employees. Here are five best practices to get the ball rolling.

1. Research Salary Rates by Occupation

Before you decide on an appropriate salary to offer your nursing employees, you’ll want to conduct background research on nursing market rate salaries. The following wage data is provided by the Bureau of Labor Statistics:

• Salary by occupation
• Salary by job characteristics
• Salary by industry
• Salary by gender
• Salary by geographic region (federal, state and local)

Once you’ve noted the salary figures that are relevant to your nursing employees, you can start developing or updating your nursing compensation package.

2. Compare Salary Offerings in Local Job Postings

Next, you’ll want to figure out what local facilities are offering for similar positions and nursing roles. Browse local job postings to ensure the salary you offer stands out among the competition.

3. Study the Demographics of Your Labor Market

When calculating your organization’s nursing compensation, you’ll want to consider the type of employee you’re looking for. Does your organization require RNs to have their BSN or is an ADN sufficient? Are you looking to hire nurses with years of experience or do you also hire new graduates? Nurses with additional qualifications can add value to an organization but will also require a higher salary. It’s important to keep this in mind when developing your nursing pay scale.

It’s also important to consider whether nurses in your organization are protected by a nursing union. Unions specify minimum salaries, set overtime rates, and establish certification pay differentials. Be sure to reference your organization’s union contract to ensure you stay compliant with mandated standards.

4. Consider Benefits Trends

Over 72% of individuals looking for a new job prioritize a job with a strong benefits package over a higher salary. When determining your organization’s nursing wage, bear in mind the costs of benefits like health insurance, 401(k) plans, paid time off, and professional development opportunities. Offering these incentives can help your position stand out among the rest, even if your salary offering isn’t as high as other local facilities.

5. Periodically Reassess Market Value

Salary adjustments are made for a variety of reasons, including inflation rate changes, talent shortages, and cost of living increases. While there is no set time frame for how often this should be done, most companies perform market adjustment raises annually. It’s important to periodically review your organization’s compensation packages to ensure they stay competitive and fall within fair market value ranges.

Recruit Qualified Clinicians Today

Now that you understand how the nursing market rate salary affects healthcare hiring and recruitment, you’re ready to attract top talent to your organization. Reach over 1 million qualified professionals looking for work on Intelycare.