The UnitedHealth Group’s Compensation Package Analysis

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Introduction

Health care organizations, as well as any other industry entities, are in continuous need of qualified staff to obtain the personnel with the highest level of expertise. It allows companies to gain a competitive advantage in the market by fostering the highest quality of performance using talent management and recruiting practices. However, for an organization involved in the health care industry, the need to employ the best candidates to fill the positions is motivated not only by the competitive advantage or revenues. Medical facilities provide services that determine the health, well-being, and lives of people. Therefore, managing staff in a healthcare organization is of essential importance. To attract and retain qualified specialists, a health care company employs effective human resource management (HRM) practices to ensure its financial stability, competitive positioning in the market, and high quality of services delivered. A cost-benefit ratio is a tool that helps organizations make decisions; thus, it is a valuable tool for health care organizations to identify the best human resource practices and compensation plans. In this paper, the UnitedHealth Group’s compensation package will be analyzed.

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The UnitedHealth Group’s Compensation Package Description

The UnitedHealth Group is a company specializing in health insurance and medical services that operate globally and employs over 300,000 individuals. The compensation and benefits packages of the company are very broad and address multiple aspects and needs of the staff. The organization cares for its employees’ health and well-being and offers health (including dental and vision services) and disability insurance plans for its employees, retirement coverage, and injury compensation (UnitedHealth Group, 2020b). Also, the company provides extensive support for the financial stability of its staff by offering “to take advantage of 401(k) Savings Plan, Employee Stock Purchase Plan, and to join the UnitedHealth Group Credit Union” (UnitedHealth Group, 2020b, para. 5).

In addition, there are such benefits available to the employees as paid time off, paid company holidays, education reimbursement, and adoption assistance. Paid sick leaves and maternity and paternity leaves are also available. The compensation in the form of wages and bonuses are competitive and provide the employees with stable income and an opportunity to increase their wages by the quality of their performance (UnitedHealth Group, 2020a). Such an extensive approach to creating a balanced compensation and benefits package allows for attracting qualified specialists with a high level of expertise and retaining them for sustainable company growth.

Cost-Benefit Analysis

Cost-benefit analysis is an important tool that helps to identify the most favorable alternatives when making a decision. In the case of the analysis of the UnitedHealth Group’s HRM and compensation package, the cost-benefit approach might illustrate the ratio between the expenses and the income. The expenses spent on employee recruitment, training, development, and retention are divided by the ultimate financial revenues the company generates as a consequence of the contribution of the hired staff (Florea, 2013). The company’s operational costs include the expenses for staffing and organizational performance; for the UnitedHealth Group in 2019, the reported operational costs are $35,193 (UnitedHealth Group, 2019). The total revenues generated by the company during the same year are $242,155 (UnitedHealth Group, 2019). Thus, the cost-benefit ratio might be calculated as follows: $35,193/$242,155=0.145 or 14.5%. This ratio indicates that the company’s benefits are much higher than the costs spent on personnel, which is why the HRM practices and compensation and benefits packages might be evaluated as highly effective.

Impact of the Cost-Benefit Ratio on Recruitment and Retention Strategies

The cost-benefit ratio is of great importance for the performance of the organization within the realms of recruitment and retention strategies. Organizational success is generally obtained using human resources since human capital contributes to competitive advantage and sustainable growth (Florea, 2013). When starting a recruitment program, the company is interested in minimizing costs and obtaining the highest level of benefits. It is obtained using a meticulous selection of the most talented and expertized candidates by offering a competitive compensation package and professional development opportunities (Bjork, 2012). Also, the cost-benefit ratio plays a significant role in the choice of retention strategies. The company is interested in minimizing costs for recruitment because the hiring of new employees has risks of candidate drop-out or additional expenditures for training and adaptation (Florea, 2013). Therefore, it is more cost-efficient to retain qualified individuals using a rewards and benefits system that would encourage employees’ loyalty and desire to build a career inside the organization.

Ways to Improve the Cost-Benefit Ratio

In essence, any organization is interested in spending fewer assets on HRM to minimize avoidable costs. In the case of the UnitedHealth Group, the ways to improve the identified positive cost-benefit ratio are also based on the principle of minimizing expenditures and increasing benefits for the company. Thus, some specific HRM practices might be useful to improve the cost-benefit ratio. According to Florea (2013), the choice of the right person for a position “will lower the training and development expenses and will grow the efficiency of the organization” (p. 275). The costs of recruiting a person with a high level of knowledge, qualification, expertise, and experience will be less than the expenses of recruiting a new individual in the industry who will require additional training. In such a manner, the methods of improving recruitment strategies for the UnitedHealth Group are talent management and internal recruitment.

Firstly, talent management, as an HRM practice, involves identifying the most talented candidates from the pool of available applicants. It allows for selecting the most qualified individuals who fit the requirements of the position at the very first stage of the recruitment process. The well-developed talent management strategy will allow the UnitedHealth Group to “create a sustainable competitive advantage” (Florea, 2013, p. 275). Secondly, internal recruitment is a means of filling vacancies by hiring individuals who are already employed in the company and might be transitioned from one department to another. In such a case, the organization can save on training and adaptation costs since the company mission and culture are already known to the person. Moreover, such a strategy might be an influential factor for employee retention since it will open more career opportunities inside the organization.

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As for the improvement of the retention strategies, there is not much space for it concerning the UnitedHealth Group. Indeed, the organization provides extensive and multifaceted compensation and benefits packages within multiple employee-centered plans that allow it to retain staff efficiently by creating favorable workplace conditions. The UnitedHealth Group has been repeatedly awarded high rankings within the best companies for employees. According to the company’s report, it was “recognized by The Financial Human Rights Campaign as among the best places to work for LGBTQ equality in 2020” (UnitedHealth Group, 2020a, p. 34). However, to maintain its competitive position in the market and facilitate its HRM practices, the UnitedHealth Group might diversify its retention strategies to minimize employee turnover. This goal might be achieved using the continuous revision of the competitive wages, non-financial rewards, and the provision of feedback to the employees to ensure timely employee issues resolution.

Role of HRM in Competitive Compensation Package

HRM is a core department in any organization, the performance of which predetermines the overall organizational success. Indeed, as Florea (2013) states, human resources constitute a vital aspect of the organizational life-cycle. In general, the more competitive compensation package the company offers, the higher are its chances to recruit the most talented candidates and retain qualified specialists. The UnitedHealth Group provides a performance-based payment system to its executives, which implies that the HRM practices aimed at talent development and professional growth encourage performance improvement for a higher compensation rate. According to Bjork (2012), three main factors determine the organization’s competitive compensation plan. They include the intent to hire the most talented candidates, the intent to pay enough to retain the best employees, and the intent to “pay above average in expectation of above-average performance” (Bjork, 2012, p. 5). Thus, the HRM department is responsible for arranging the most favorable workplace conditions and supplying competitive wages to retain employees.

Methods of Improving the Compensation Package

Benchmark surveys might be initiated by the human resources department to identify the trends in the compensation plans of similar organizations operating in the same industry. The UnitedHealth Group might initiate a comparative survey to evaluate its wages rate with an opportunity to revise them in the future. Also, when distributing benefits, it is necessary to cultivate performance-based benefits and compensation to encourage high-quality performance. The UnitedHealth Group’s reports indicate that the company provides performance-based wages for executives and high-rank employees (UnitedHealth Group, 2020a). However, one of the methods of improving the compensation package by preserving a positive cost-benefit ratio is to enhance a performance-based payment system across all departments. It will ensure the strategy of performance excellence encouragement that will ultimately contribute to the organization’s revenues.

HRM and Strategic Goals of the UnitedHealth Group

As it has been identified, the work of the human resource department particularly determines the overall success of a health care organization. The strategies and practices it selects to recruit and manage staff influence the ultimate revenue-generating and competitive advantage of the organization. The UnitedHealth Group’s strategic goals include sustainable global growth and providing the best quality of health care and insurance services to its employees. HRM plays a crucial role in achieving these goals by arranging compensation, benefits packages, career development, and succession planning to ensure that the company employs the best professionals. Systematic and mission-aligned practices allow for achieving long-term organizational goals by investing in human resources. Therefore, the company prioritizes multifaceted recruitment approaches and offers a wide range of benefits and competitive compensation to facilitate staff loyalty and retention.

Conclusion

Overall, HRM practices and ultimately organizational success are inherently interconnected. The strategies aimed at employee recruitment and retention predetermine the achievement of the company’s strategic goals of sustainable growth and competitive positioning in the market. The cost-benefit ratio of the UnitedHealth Group demonstrates that the company uses effective HRM practices that allow managing staff cost-effectively. However, several ways for improvement have been proposed, including extensive talent management procedures, internal recruitment opportunities, benchmark surveys for competitive wages research, and continuous improvement of workplace conditions to ensure competitive advantage.

References

Bjork, D. A. (2012). Healthcare executive compensation: A guide for leaders and trustees. Health Administration Press.

Florea, N. V. (2013). Cost/benefit analysis – a tool to improve recruitment, selection, and employment in organizations. Management & Marketing-Craiova, 11(2), 274-290.

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UnitedHealth Group. (2019). Form 10-K. Web.

UnitedHealth Group. (2020a). 2020 Proxy statement. Web.

UnitedHealth Group. (2020b). Rewards and benefits. Web.

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