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New Compensation System

“Assumptions, Disclaimers, and Caveats”

by Kathryn L. Klepak,   Director of Human Resources

 1.)  Titles vs. Positions

The two (titles and positions) are mutually exclusive – they function as separate issues and, in most  cases,  are not directly related to what zone employees are placed in.  Nothing in the new compensation plan has addressed change in titles, but rather change in zones based on the criterion used to determine what zone a position (not incumbent) should be placed in.   Zone has to do with such factors as breadth, scope, responsibility, required skills and abilities, span of control, decision-making responsibilities, amount of experience, degrees and certifications required for the job, and level of supervision within the job as well as market analysis. The primary data used in the survey conducted by Phil Henry, our compensation consultant, were market studies and surveys which were used to benchmark and compare our position titles with similar position titles in other institutions or businesses.

 It is important to note that data used is only as good as what is provided by survey participants and is subject to a lot of conjecture, hypothesizing, and judgment calls in trying to compare positions with like titles which may or may not cause market study information to be erroneous.  Although I am confident that survey information filled out by our institution is accurate, we cannot assume that all other survey participants were as detailed and exact as we had tried to be.  Since titles with very brief job explanation are the only source of survey information obtainable rather than full job descriptions for each position, it sometimes makes for questionable data provided in surveys.  Direct benchmarking is the safest and surest way to obtain accurate comparable data, but this process is highly time consuming and can take up to two weeks per position.   Due to time constraints, both in obtaining approval of our budget and the university's desire to implement our new pay plan as expeditiously as possible, we have proceeded with implementation of our new plan, but have considered that the possibility of error and misplacement in assigning positions to proper zones may exist in some cases.  In an effort to allow for rectifying possible errors in placement of positions, an employee may appeal placement of his/her position by filing for a reclassification.  

Link to Reclassification Information

Changing Titles rather than reclassifying positions:

There is no problem from an HR standpoint in issuing a title change for the purpose and maintaining external relationships with counterparts outside of this institution. I realize that it sometimes necessary to utilize a universal title understood by all institutions to help us in maintaining congruency with outside sources. These title changes alone; however, cannot be for the purpose of reclassification, nor has HR approved or reviewed these positions for reclassification without going through the proper procedures of reclassification. If at any future date requests are made to reclassify these positions, there can be no expectation of reclassification simply because the title of the positions have changed. These positions will retain their same salary and not be removed from their current zone. The PAF (Personnel Action Form) can be used as the instrument of change to request the title changes. This PAF must have the President's signature on the form. In these cases, it is advised that memorandum be issued to the respective Vice President who can then inform the President of the intent of the request for the title change.

Again, reclassification will take into account only the position proper, not the qualifications or outstanding merit of the individual currently in that position.   Filing for a reclassification does not ensure that a position will be approved by HR for reclassification.

2.)    Incumbents vs. positions

Once again, the two (incumbents and positions) are mutually exclusive.  They are considered separately and should in no way be confused or paired together.  Positions are associated with pin numbers and accounts numbers and zones, they come with a prescribed set of requirements and job descriptions outlining duties and required experience or qualifications.  Incumbents, with all of their skills, abilities and qualifications are not considered when placing a position in a zone.  Incumbents should never be considered when placing a position in a zone, rather, outstanding performing employees should be rewarded through a merit pay system, used in conjunction with this compensation plan. 

 3.)    Compression Issues:

 What is Compression?

Salary compression occurs when departments are forced to increase entry-level salaries to attract new employees. At times, this can lead to situations where the pay rate of new employees is similar to or even more than that of more experienced employees. When this happens, the difference in pay between the new employees and the more experienced employees has become "compressed" so that it doesn’t properly reflect the performance and longevity of the more experienced employees.  (definition extrapolated from  U.T.S.A.  website)

There are two key components to fighting compression in this new compensation plan.  The first is to bring all current employees (incumbents) up to the minimum of their new salary range in the new compensation plan, which we are planning to do.  The second is to implement a merit based pay plan in conjunction with this plan, which due to financial constraints is about two years away.   We recognize that the longer we wait in combining a merit plan with the new compensation plan, the harder it will be to handle the problem of compression: that is… new hires being paid more than existing employees who have remained loyal to the institution and their job by remaining in their jobs.  Without a merit-based plan, the message that employees receive is that employees will get rewarded by non-performance and moving from job to job.  Without a merit-based plan, current employees will still not be making as much as new employees hired under this new compensation plan.  Since the new compensation allows for flexibility in hiring up to 1/3 above the minimum, then existing employees may still not be making as much money as new hires.  This may cause morale problems and could send the wrong messages, even if our long-range goal is to fix the problem of compression.  The goals of our institution are to combat the problem of compression and eventually be able to reward employees through a merit based pay plan which will be integrated into our new compensation plan as soon as funding is available and we have created an employee evaluation to support such a plan.

 4.)    Dated Survey Data:

Survey data will need to be aged periodically to incorporate a COLA – cost of Living Adjustment.  If funding is available, a  4 - 5% across the board increase to all survey ranges should be adjusted annually in order to make the data most up to date.

 5.)    Defining a Merit System:

Although a top priority, we are currently about two years away from implementing a merit plan due to financial constraints.  Our institution is currently in the process of defining the parameters of such a plan, and are researching an evaluation system which would be used as a tool in determining the overall performance of our employees, linking these evaluations to a merit increase plan within our new compensation plan.