Personnel and Compensation. Institution Compensation Plans Proposal. Vice Chancellor Dale Sims

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1 DATE: June 28, 2012 COMMITTEE: SUBJECT: PRESENTER: ACTION REQUIRED: STAFF RECOMMENDATION: Personnel and Compensation Institution Compensation Plans Proposal Vice Chancellor Dale Sims Roll Call Vote Approval BACKGROUND INFORMATION: In accordance with legislative amendment and TBR Guideline P-043 Compensation, the following institutions submitted new or revised compensation plan to the Central Office for review: Institution Summary of Changes Cleveland State Community College New compensation plan for clerical/support staff, administrative/professional, executives, and faculty positions with new market data. Columbia State Community College New compensation plan for clerical/support staff, administrative/professional, executives, and faculty positions with new market data. East Tennessee State University Amendment to the original compensation plan proposing a faculty incentive pay plan based on salary recovered from external funding sources. Middle Tennessee State University Amendment to the original compensation plan to increase the rates for faculty promotion. Northeast State Community College Amendment to the existing compensation plans for faculty, clerical/support, and administrative employees to move all of the salary ranges by 1%, consistent with the additional cost of living increase approved for implementation effective January Pellissippi State Community College Amendment to the existing compensation plans for faculty, clerical/support, and administrative employees to move all 1

2 of the salary ranges by 2.5%, to allow new employees to be paid equitably within their respective salary ranges. Southwest Tennessee Community College New compensation plan for clerical/support staff, administrative/professional, executives, and faculty positions with new market data as well as incentives for a pay for performance bonus. Tennessee Tech University Amendment to the original compensation plan to increase the rates for faculty promotion with a three-year phase in plan. University of Memphis Tennessee Technology Centers Central Office New compensation plan for clerical/support staff, administrative/professional, and executive positions with new market data and a change in plan structure to a broad band approach. New compensation plan for clerical/support staff, administrative/professional, executives, and faculty positions with new market data. New compensation plan for Central Office staff, Central Office executives, Presidents and TTC Directors with new market data. The new or revised compensation plans were reviewed within the Central Office by a committee of five (5) individuals from the following offices; Finance, Academic Affairs, TN Technology Centers, and two (2) individuals from Human Resources. The Committee reviewed the proposed plans for methodology, market data being used, equity, consistency, completeness, and clarity. After review of the proposed plans, the Committee respectively recommends Board approval of the proposed revisions or new compensation plans. 2

3 REVIEW OF INSTITUTION COMPENSATION PLANS JUNE 2012 Cleveland State Community College (ClSCC) Cleveland State Community College (ClSCC), is proposing a new compensation plan to be implemented in FY The previous plan was completed in 2001 and implemented in All positions in the proposed plan were priced at 100% of the market. Market data for support staff positions was obtained from O Net, Bureau of Labor Statistics; Payscale, a compensation database scalable by location, nature of organizations, size of organization, and job content; CompAnalyst, a compensation database comparable to Payscale; and Economic Research Institute (ERI), a compensation database comparable to Payscale. The support staff salary structure was increased approximately 3%, structure changes were made to make the percentage difference between midpoints and the percentage differences between the range minimums and maximums consistent. The proposed structure has a consistent 9% difference between midpoints and a consistent 40% spread between the range upper and lower limits. There are ten salary grades for the support salary range structure. The College wishes to continue to apply the living wage minimum standard of $10.00 per hour for any position. The calculation for target compensation is ten years of experience in the position to reach midpoint of the pay range. Market data for the administrative/professional employees was obtained from CompAnalyst, ERI, Payscale, and the College and University Professional Association- Human Resources (CUPA-HR). The proposed professional salary range structure reflects a 13.4% increase required to move midpoints to market levels. The proposed structure has a consistent midpoint difference of 10.3%. The range spread is a consistent 50% between the range upper and lower limits. Also, one additional grade was added to the structure to provide a market-competitive pay range for Deans. The calculation for target compensation is twelve years of experience in the position to reach midpoint of the pay range. For executive positions, CUPA-HR data was used comparing budget, southern institutions, TBR Institutions, and the ClSCC peer group. An executive salary range structure has been developed to achieve better market alignment. The proposed structure has a consistent 10% difference between midpoints and a consistent 60% spread between the range upper and lower limits. There are ten salary grades or ranges for the executive salary range structure. The calculation for target compensation is twelve years of experience in the position to reach midpoint of the pay range. For faculty positions, the market data was obtained from the Southern Region Education Board (SREB) and CUPA-HR data for two-year schools. The proposed salary range

4 structure considers rank and degree. The impact of differing market value based on discipline will be recognized during the hiring process by applying a premium for hardto-fill disciplines such as Nursing/Health Science, Engineering Technology, CIT, Business, or Science. The range of discipline premium will be 10% to 15%. As a faculty member advances in rank, the decision regarding the application of a discipline premium will be revisited and continued as appropriate. The ranges are built around the average by rank and degree with a 50% range spread from minimum to maximum (+/- 20% from midpoint). Total career experience required for faculty members to reach the midpoint of the ranges is as follows: instructor = 10 years; assistant professor = 15 years; associate professor = 20 years; and professor = 25 years. Upon approval of the new compensation plan, it is proposed the salaries of new hires would start at the new minimums or higher of the salary ranges, as experience and market dictate. The first priority for current employees is to address those below the minimum of their assigned salary range. As additional funds are available the College will address those furthest, percentage wise, from their target level. Columbia State Community College Columbia State Community College (CoSCC) is proposing a new compensation plan to be implemented in FY The previous plan was completed in All positions in the proposed plan were priced at 100% of the market. Market data for clerical/support staff positions was obtained from O Net, Bureau of Labor Statistics; Payscale, a compensation database scalable by location, nature of organizations, size of organization, and job content; CompAnalyst, a compensation database comparable to Payscale; and Economic Research Institute (ERI), a compensation database comparable to Payscale; and the College and University Professional Association-Human Resources (CUPA-HR). Based on the market data, the current clerical/support salary ranges are at market. Therefore, no adjustment to the ranges is necessary. The midpoint differentials are approximately 10% and the range spreads are 50%. The new proposal does change the starting pay to be at least a living wage of $18,506. For support positions the target for an employee to progress to the midpoint of the salary range is eight years. Market data for the administrative/professional employees was obtained from CompAnalyst, ERI, Payscale, and CUPA-HR. Based on market data; it is proposed that the current structure for administrative and professional positions be increased by 2% with no change in the architecture of the salary range. The midpoint differentials progress from 15% to 20% from low to high and the range spreads progress from 40% to 50% from low to high. For administrative/professional positions the target for an employee to progress to the midpoint of the salary range is twelve years. For executive positions, CUPA-HR data was used comparing SREB institutions, TBR Institutions, and two-year institutions. The current executive salary range structure was

5 lagging the market by 3%. The proposed structure has a consistent 10% difference between midpoints and a consistent 60% spread between the range upper and lower limits. There are ten salary grades or ranges for the executive salary range structure. The calculation for target compensation is twelve years of experience in the position to reach midpoint of the pay range. For faculty positions, the market data was obtained from the Southern Region Education Board (SREB), other TBR two-year institutions, and CUPA-HR data for two year schools. The faculty ranges lagged the market by 2.8%. The proposed plan considers the faculty member s academic degree when establishing salaries, as well as rank. Total career experience required for faculty members to reach the midpoint of the ranges is as follows: assistant professor = 3 years; associate professor = 6 years; and professor = 11 years. As funds become available, the College will initially give priority to those employees whose salaries are below the minimum of the salary ranges. As additional funds become available, they will be applied toward closing the market gap, with priority given to those whose pay is furthest from their target. East Tennessee State University East Tennessee State University (ETSU) is proposing a faculty incentive pay plan based on salary recovered from external funding sources. The plan seeks to reward faculty with incentive pay based on the salary recovered from external funding sources, up to 50% of the faculty member s salary. For faculty to be eligible for incentive compensation, the external sponsor must provide funding for a portion of their base salary, all associated benefits, and the maximum Facilities and Administration rate allowed by the sponsor s formal policy. Grant or contract activity may entail buy-out of the faculty member s teaching and/or clinical or service responsibilities, requiring engagement of a temporary instructor or loss of clinical or service revenue. The cost of temporary instruction, estimated loss of clinical revenue, or other costs will be recovered prior to the research faculty receiving incentive pay. Agreements will be reviewed each year and adjusted as necessary. Some faculty may have research appointments with contracts that require that they bring in external funding to pay a percentage of their base salary. Faculty in this case must first recover that portion of their base salary before being eligible for incentive pay. The proposed plan will follow the Office of Management and Budget Circular A-21 for compliance purposes. Additionally, based on an internal campus study, ETSU is requesting to revise their Compensation/Equity Plan to address the methodology used to develop academic faculty market targets; an increase in market target to the 60 th percentile; and the addition of an appeal process for employees who disagree with their equity pay calculations. The request in the market target is brought about by several years of unfunded or underfunded implementation of the Plan.

6 Middle Tennessee State University Middle Tennessee State University (MTSU) has requested a change to the faculty promotion structure effective July 1, The faculty promotion schedule was last updated in The new schedule proposes a $1000 increase to the current rates as follows: Position Current Proposed Professor $6500 $7500 Associate Professor $5000 $6000 Assistant Professor $3500 $4500 These increases are subject to the availability of funding in each fiscal year. Northeast State Community College Northeast State Community College (NeSCC) is proposing a 1% increase to their existing compensation plan. NeSCC requested and received approval last year to adjust their salary ranges by the 3% COLA provided. Additionally, NeSCC received approval to provide current employees an additional 1% COLA effective January 31, Increasing the salary ranges an additional 1% now allows new employees to be hired equitably with current employees within their respective salary ranges, and helps to minimize the number of employees who will be below the minimum target ranges. NeSCC is in the process of contracting with a consultant to review the entire compensation plan and anticipates submitting a request for approval of a new plan in the near future. Pellissippi State Community College Pellissippi State Community College (PSCC) is proposing a change to their existing compensation structure for faculty, exempt, non-exempt and executive employees by 2.5%. The plan was last updated in Market data was obtained from CUPA-HR and the TBR community. Increasing the salary ranges an additional 2.5% allows new employees to be hired equitably with current employees within their respective salary ranges, and helps to minimize the number of employees who will be below the minimum target ranges. Southwest Tennessee Community College Southwest Tennessee Community College (SWCC) is proposing a new multi-faceted compensation plan. The current plan was last updated in TBR Community Colleges, CUPA-HR and CompAnalyst were the primary sources for market data for Faculty, Executive and Administrative/Professional positions. Surveys covering local area practices were used for Clerical/Support positions. The proposed structure will change the Administrative/Professional structure from alphabetical to numerical and add four pay grades for a total of 15 market based pay grades with a semi-consistent midpoint differential set at eight percent for pay grades and 15% for grades with a 50% range spread. The market point for each grade

7 is determined by matching three main sources: level of education, years of experience and competent position concentration. The proposed Clerical/Support structure will add two pay grades for a total of 12 pay grades with a consistent 10% midpoint differential across the pay structure. These additional pay grades support the development of career progression. The proposed plan also includes a minimum hourly rate of $8.00/hr. It is proposed to adjust the faculty pay scale to reflect the various disciplines and utilize a two percent midpoint differential between ranks within the department. The new revised schedules represent nine academic departments that are comprised of 73 academic disciplines with a range spread of 50% and the midpoint differential between ranks varied based upon market. The new proposed compensation plan for SWCC also provides for a pay-for-performance (PFP) bonus aligned to the College s strategic plan, mission, vision, unit and individuals goals. The bonuses would be paid on the employee s anniversary date, July 31, the last check in December, or other dates as subject to the availability of the College s resources. The amount of money available for distribution will be determined annually through budget analysis and a process of recommendations and approvals involving Human Resources, the Finance Department, and the Budget Department and will be payable at the discretion of the College. The one-time performance bonus will be based on the following factors (the percentage of bonus attributed to each factor shall be designated by the President annually): individual performance; decision unit performance, based on the unit s accomplishment of its goals as reflected in the College s strategic plan; institution performance, established by the President in consultation with senior staff. In order to be eligible for PFP bonuses, employees must: rate no less than meets expectations in any performance factor; have an overall exceeds expectation rating; have no letters of reprimand issued during the evaluation period; and have received a performance evaluation during the preceding 12 months. As funds become available, the College will initially give priority to those employees whose salaries are below the minimum of the adjusted salary ranges. As additional funds become available, they will be applied toward closing the market gap, with priority given to those who were previously at the midpoint of their position and certified as fully competent (having providing the verification of required training or certification). Lastly, pay for performance bonuses will be paid annually to eligible employees. Tennessee Tech University Tennessee Tech University (TTU) is proposing a revision to their faculty compensation pay plan effective July 1, 2012 with a three-year phase-in. The current promotion rates for faculty were established in 1998.

8 To minimize inequities created by fully implementing the new promotion increases immediately, a three-year phase-in is recommended as follows: In the first year to begin , the raise for moving from assistant to associate professor would be 7% of salary or $4000, and the raise from associate to full professor would be 9% or $6000, the greater amount in each case. For promotions approved to begin with the academic year, the raises would be 7.5% or $4500 and 9.5% or $7000, respectively. For promotions approved to begin , the raises would reach their full recommended amounts of 8% or $5,000 and 10% or $7500, respectively. Position Current Proposed with three-year Phase-In Professor $4500 Greater of 10% of salary or $7500 Associate Professor $3000 Greater of 8% of salary or $5000 Assistant Professor $1500 Unchanged for Position Professor Greater of 9% or $6500 Greater of 9.5% or $7000 Greater of 10% or $7500 Associate Professor Greater of 7% or $4000 Greater of 7.5% or $4500 Greater of 8% or $5000 Additionally, the TTU proposal includes a provision for tenure-track faculty who earn a terminal degree to receive an automatic raise upon completion of the terminal degree, irrespective of promotion eligibility. The recommended amount is consistent with that provided to non-faculty employees at $2500 increase to base salary if the degree is directly related to the faculty member s teaching duties, as determined by the department chair and $1000 if the degree is not directly relevant. University of Memphis The University of Memphis (UoM) is proposing a new compensation plan for all staff. Faculty compensation issues are not considered in this Compensation Plan, nor are Athletic contractual employees. The recommended plan reduces the number of pay grades from 410 to 14 broad pay bands, includes a comprehensive review of classification titles and job descriptions, and aligns internal equity while evaluating market salaries. The current UoM Compensation Plan has been in place for 13 years. In 2006 the institution proposed a new plan with 35 pay grades instead of 410, and while approved, it was unable to be implemented due to funding constraints. The proposed plan consists of 14 pay bands, allowing for differentiation with classification titles based on the qualifications of the individuals while ensuring consistency and equity. Market data for all positions will be obtained using CompAnalyst, a compensation database that provides aggregated market data from hundreds of salary surveys and is customizable by location, size of institution, nature of organization, etc. There is no expectation for years of service from minimum to midpoint of a range, due to the number of positions within a pay band. Internal compensation and

9 market salaries may change and cause a realignment of salaries, or other financial factors may limit the University s ability to follow a specific process. The first pay band for all staff begins at minimum wage with a range of 110%. The second pay band adds 10% to the minimum of the first pay band. Each subsequent pay band increases by an additional 2% (12%, 14%, 16%, etc.) with the increment of the pay band increasing by 5% (110%, 115%, 120%, etc.). After a comprehensive review of employee position descriptions and input from managers, employees will be slotted into of the new pay bands based on title, job duties, scope of responsibility/authority, percentage of effort, designation of essential/marginal functions and salary using internal and external comparisons. If approved, the initial objective will be to bring each employee below the minimum salary of $8.75/hour to the new threshold. Other adjustments will be made as funding permits. Tennessee Technology Centers The Tennessee Technology Centers (TTCs) are proposing a new compensation plan for all staff and faculty, except the Directors who are included in the Central Office Compensation Plan. The current plan was completed in The proposed plan covers 26 of the 27 TTCs with the TTC Chattanooga following the Chattanooga State Community College Compensation Plan. Positions were prices at 100% of market for the Nashville area with a projected phased-in implementation of 3-5 years, using 90% as the first target salary. The Nashville market was chosen for standardization and consistency in having a common salary structure. Administrative and professional positions were priced in the marketplace based on information that was provided in job analysis questionnaires and internal relationships with other comparable positions. The range structure was developed providing 16 salary ranges with a 60% range spread and a 10% midpoint differential. Clerical and support positions also utilized job analysis questionnaires for pricing the positions within the marketplace. The clerical and support structure has nine grade levels with a 50% range spread and a 10% differential between midpoints. Faculty positions at TTCs are different than at Community Colleges and Universities and are affected more by market rates for skilled professionals than the traditional faculty positions. Therefore a combination of factors were used to develop the salary structure including: guidelines for rank progression; logical pay progression based on the number of years it takes to progress between the faculty levels and market pricing for skills that would satisfy the basic qualifications for an Associate Instructor position. The proposed structure has 4 levels; one each for Associate Instructor, Instructor, Senior Instructor, and Master Instructor with a 40% range spread.

10 If the plan is approved, the TTCs will initially give priority to those employees whose salaries are below the minimum of the salary ranges. As additional funds become available, they will be applied toward closing the market gap. Central Office The Central Office is proposing a new compensation plan for the Central Office staff, Executives, Presidents, and TTC Directors. The previous plan was conducted in Market data for Central Office staff positions was obtained from the College and University Professional Association-Human Resources (CUPA-HR); Payscale, a compensation database scalable by location, nature of organizations, size of organization, and job content; CompAnalyst, a compensation database comparable to Payscale; and Economic Research Institute (ERI), a compensation database also comparable to Payscale. The proposed plan for Central Office staff is priced at 100% of market with a target salary for implementation at 95% of market. The salary structure will have a graduated spread between minimum and maximum of 40% at the low end to 60% at the high end and a midpoint differential of 9% to 11% from low to high with a total of 16 salary ranges. Time in position was calculated providing 100% credit for time in position or equivalent position and 50% credit for related career experience. The position s salary grade influences the number of years of credited experience required to achieve the target compensation level, with a graduated scale from three years for entry level positions to eight years for more advanced positions. Market data for Executives, Presidents, and Directors was obtained from CUPA-HR; UT comparables; ERI and CompAnalyst. Market comparisons were made at 100% of market with a target salary for implementation at 90% of market. There isn t a current salary structure with pay ranges for this group of positions. A new structure is proposed that has a 60% spread from minimum to midpoint and a 10% differential between midpoints and 19 pay ranges that is inclusive of all Director, President, and Central Office Executive positions. Comparable data from similar positions, as well as the number of years an incumbent has in the same or similar position, and related experience were considered in the target for Central Office executives. For university presidents, Carnegie Classification and peer institution groups were used for market comparison. Community college presidents were grouped by budget and enrollment, as the same 15 peers are shared among the TBR community colleges. The TTC directors were considered by enrollment, budget, number of employees, and number of programs. If the plan is approved, priority will be given initially to those employees whose salaries are below the minimum of the salary ranges. As additional funds become available, they will be applied toward closing the market gap, with priority given to those whose pay is furthest from their target.

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