Healthcare Issues & Trends

Advice & Insights for healthcare's Leaders & HR Professionals


Parting Gifts: Severance Paid on Voluntary Termination

Posted on April 22, 2013 by David Bjork

Somehow the most egregious examples of bad practices in executive compensation come from distinguished educational and cultural institutions, rather than from hospitals and health systems.

When Jacob Lew was nominated to become Secretary of the Treasury, the press discovered that NYU gave him a parting gift of $685,000 when he quit his position there to go to Citigroup.  NYU called it severance, but acknowledged that Lew left voluntarily and that the payment wasn’t required by the terms of his contract.

A spokesman for NYU, John Beckman said, “It is not uncommon for large organizations to make payments to senior officials on their departure, as happened in this instance.”
He must have known something the rest of us didn’t, since no one else seems to think it is usual for tax-exempt organizations to  give parting gifts to people who leave voluntarily. 

It turns out he did know something the rest of us didn’t:  the New York Times reported that NYU gave Dr. Harold Koplewicz, an executive at NYU’s medical center, $1,230,000 when he left to found a competing organization.  This, too, was characterized by NYU as severance, even though Beckman said Dr. Koplewicz left voluntarily.

Severance is paid when an employer fires an executive—not when the executive quits voluntarily.  It is either a payment of damages for breaking an executive’s employment contract or payment in exchange for a release from potential claims for discriminatory or unjust termination.

Yes, sometimes employers allow an involuntary termination to be characterized as voluntary resignation, and go ahead and pay severance anyway—but not when someone is resigning to take another job—since one of the purposes of severance is to provide income continuity while the person who was fired searches for another position.

Severance paid on voluntary termination, though, is nothing but a parting gift—and parting gifts are private inurement—gifts not earned through work, not warranted by contract, just a misappropriation of charitable assets.  Why give a parting gift to someone who was paid $800,000 a year while working for NYU, as Mr. Lew was?  Gifts of this magnitude—unearned gifts—expose the recipients to risk of intermediate sanctions, and it would be hard to defend as customary practice or fair market value for services rendered.

Other universities may provide parting gifts in the form of severance to executives who resign, but it is not something that can be easily justified or excused as a common practice among large organizations, as Mr. Beckman asserts.  Most large organizations have better things to do with their resources than give money away to someone who was already paid fairly—even generously—while working. 

It is one thing to provide a placque or a watch or a gift certificate when someone retires, but few employers want to give that kind of congratulatory recogniztion to an employee who is quitting to take a job elsewhere.  It is quite another thing to provide a gift of this magnitude and claim that it is common practice.

If other colleges and universities do provide parting gifts of this magnitude, it must be because they ignore the fact that their tax-exemption depends on their using their resources to fulfill their mission, or because their trustees pay no attention to the way the university gives away its charitable assets to former employees.

Read more about David Bjork, Phd and INTEGRATED Healthcare Strategies on the INTEGRATED website.

Introduction to Employee Engagement

Posted on April 11, 2013 by Gallagher Integrated

Employee engagement is a fascinating world.  When used as a metric, it's a powerful predictor of what type of work force an organization has and its impact on business success.

But engagement is complicated and complex.  What does it means? How does it work? Who benefits?

So we got Dr. David Rowlee, our employee engagement expert, to give us simple answers to these complex ideas. We promise--he'll make it Clearly Understandable.

For instance, did you know that a strongly engaged work force in healthcare organizations has a measurable positive impact in critical areas like quality care, clinical outcomes, patient safety, innovation and profit margin?

See more ways to simplify employee engagement--WATCH THE VIDEO SERIES at clearlyunderstandable.com.

And find out more about INTEGRATED Engagement Survey services at integratedhealthcarestrategies.com.

Using high-quality resources to make critical healthcare compensation decisions

Posted on April 5, 2013 by Gallagher Integrated

INTEGRATED Healthcare Strategies offers a wide variety of national compensation surveys.  We've recently extended a few of our survey deadlines to give healthcare organization leaders and HR professionals a second chance to get the high-quality resources they need to make critical compensation decisions.  Even better than just purchasing the survey reports, participating organizations receive a discount on their survey purchases.  Bundle the National Healthcare Leadership & Staff Surveys to save even more!

Check out the following dates to see what's going on now, and what's coming soon.

NATIONAL NURSING COMPENSATION SURVEY
EXTENDED DEADLINE!
Includes more than 100 positions, special pay practices, and data reported nationally and by region.
Participation deadline:  April 17, 2013
Publication:  May 10, 2013

NATIONAL HEALTHCARE STAFF COMPENSATION SURVEY
EXTENDED DEADLINE!
Published for over 20 years and includes more than 250 benchmark positions.
Participation deadline:  April 19, 2013
Publication:  June 28, 2013

* Co-sponsored by ASHHRA

NATIONAL HEALTHCARE LEADERSHIP COMPENSATION SURVEY
OPEN
Data on more than 200 positions at executive, director and manager levels.
Participation deadline:  May 10, 2013
Publication:  August 30, 2013

* Co-sponsored by ASHHRA

MEDICAL DIRECTOR COMPENSATION SURVEY
JUST OPENED!
Covers more than 90 position titles and includes data from more than 150 organizations.
Participation deadline:  June 7, 2013
Publication:  August 30, 2013

ADVANCED PRACTICE CLINICIAN COMPENSATION SURVEY
More than 70 benchmarks for nurse practitioners, physician assistants, and nurse midwives.
Participation opens:  July 11, 2013
Participation deadline:  September 27, 2013
Publication:  December 27, 2013

CUSTOM SURVEY CAPABILITIES
Infinite possibilities from custom cuts of data and Custom Surveys offered by INTEGRATED.

For more information on any of our surveys or to purchase or participate, please email/contact comp.surveys@IHStrategies.com.

 

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