Compensation

Benchmark jobs are those that have a substantial portion of their work that is comparable to positions found at other higher education institutions or other organizations. This allows us to compare the pay for a given job or group of jobs.

A compensations study involves a review of our freshly revised job classifications to determine a fair and competitive salary range.  This analysis is based on both a review of comparable market survey data as well as a review of internal salary relationships between jobs.

We should note that the primary motivation for these projects is to create a sustainable, fair and understandable classification and compensation program.  The revised program will allow us to do a compensation study based on up-to-date position information (from the PDQ).

Compensation refers to the monetary rewards earned by workers.  Many people think of compensation as salaries or hourly wages but it truly encompasses the fringe benefit package including health benefits, retirement benefits, paid time off, the employer’s contribution to taxes and much more.

Not in a formal way.  The University is always aware of the value of our compensation programs but the market survey conducted will focus on wages.  Considering non-salary benefits like retirement, health benefits, leave accruals and tuition benefits do play a role in the University’s decision on how close to “market” we want to be with our wage rates.  Non-salary benefits are not surveyed.

The “labor markets” will be discussed by leadership teams based on recommendations collected by Sibson Consulting.  These should be determined by Thanksgiving.  Typically, for FLSA exempt positions, the markets include similarly sized colleges and universities nationally and some of the local employers.  Classified positions are usually compared to local and regional employers.  The rule of thumb is to compare ourselves to organizations from which we draw individuals and to whom to lose individuals.  Once these markets are determined, we will update our web pages.

There are a range of options that organizations may consider when such studies are conducted.  Some factors that impact a decision may include the scale of the differences, the market trends for the job in question, internal equity, and budget constraints.  Regional factors may be taken into consideration.

We will have new classifications and new salary ranges and may have new classification titles.  It is too early to predict what will happen to any individual’s salary regarding increases.

What should be evident is that we have made our best effort to classify positions correctly.  This will reduce the instances where two employees performing work at similar levels are in different pay ranges and earning different wage rates.  This does not mean individual employees will receive pay increases or pay reductions specifically to correct the imbalances but it will mean, over time, these situations will even out. 

Another benefit will be the University’s plan to address the compensation-related issues brought out by the classification study.  We should develop a multi-year plan that is consistent with the results and our resulting compensation philosophy.

No.  If an employee’s salary is above the maximum of the range, salary may be frozen until the salary range catches up.  This process is still being analyzed and will be determined prior to implementation.

Salary compression occurs in a number of ways.  One common cause is a new employee earning close to or more than a long-term employee doing similar work, or an employee making close to what their supervisor makes.  Another cause is not having the funding to move employees through a salary range or the salary range changing at about the same rate the employees move through it.  This causes the same situation described above.

There are a number of solutions to salary compression issues.  These studies will point these out to us.  Please know that they do matter because these are the most common “internal equity” problems.  It is likely that the University will have multiple issues to address with limited compensation dollars so we will have to prioritize the fixes. This analysis will be conducted primarily by Human Resources and the budget director.   This subsequent plan should help us all understand those priorities.

Very likely yes.   Nobody will see a pay reduction as a result of this study.  Later in the process, university leadership will discuss what to do if an individual’s salary is below the minimum of the new range or above the maximum. 

A compensation philosophy is simply a formal statement documenting the company’s position about employee compensation.  It documents pay strategy and essentially explains the “why” behind employee pay.  It can also create a framework for consistency. A well-designed compensation philosophy supports the organization’s strategic plan and initiatives, business goals, competitive outlook, operating objectives, and compensation and total reward strategies.

No.  If an employee’s salary is below the minimum of the new range, it is common for it to be brought up to the minimum immediately.  This process is still being analyzed and will be determined prior to implementation.