Methods for Establishing and Maintaining an Equitable Salary Structure
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1 Methods for Establishing and Maintaining an Equitable Salary Structure
2 Note: Slides with links, handouts and spreadsheets with calculations are available at
3 Prologue The objectives of compensation programs are: Recruitment Retention Equity Reward desired behavior Control costs Comply with legal regulations Further administrative efficiency Duda
4 This session 1. Key Concepts Equity/Fairness Salary Plan Design (Elements and Terminology)
5 This session 2. Experiences at the UF Libraries Decisions and policies establishing and maintaining faculty and staff salary structures
6 This session 2. Experiences at the UF Libraries Why? Illustrate the above concepts in practice Depict decisions, processes and outcomes Resulting system is transparent and maintainable, and modular and customizable --transferable
7 This session 3. References 4. An invitation to continue this discussion
8 Concepts
9 Equity External Internal Individual Personal Fairness Distributive Procedural Equity and Fairness Terpstra, Honoree
10 Forms of Equity External In comparison to similar jobs in other organizations Internal In comparison of different types of jobs in one organization Terpstra, Honoree
11 Forms of Equity Individual In comparison of performance of individuals working in the same type of job in the same organization Personal Comparison to the employee s perception of his or her worth Terpstra, Honoree
12 Fairness Types Distributive Perceived equity of the pay received by employees Procedural Perceived equity of the decision-making processes and procedures used to distribute pay Terpstra, Honoree
13 Fairness and Equity Research has generally found Procedural Fairness is most important for employee pay satisfaction. Individual Equity is the second most important. Terpstra, Honoree
14 Fairness Types Procedural Fairness (continued) Strongly influences whether employees view the organization and management as trustworthy and valuing them. Terpstra, Honoree
15 Fairness Types Procedural Fairness (continued) Increased through: Consistency Design participation Good communication practices Redress opportunities Terpstra, Honoree
16 Salary Administration
17 Salary Administration Three fundamental issues for pay policies: (1) setting pay levels in relation to other companies (2) evaluating individual jobs and determining pay relationships among them; and (3) determining pay relationships among individual workers within the same job. Personick
18 Salary Administration These issues are addressed through effective Salary Structures
19 What is a Salary Structure? System where jobs of roughly equal value or worth are grouped into grades with competitive salary ranges. Note: One employer may have multiple models or approaches within this structure. Singer, Francisco
20 Why establish a structure? Compensation decisions made solely to pacify employees inevitably produce higher operating costs and create an environment that rewards complaints rather than performance. Whittlesey, Maurer
21 Why establish a structure? Individualized compensation arrangements rarely go unnoticed by other employees, despite the company s best efforts at secrecy, and usually cause some rancor within the employee group. Whittlesey, Maurer
22 Why establish a structure? By establishing compensation guidelines based on current market norms before recruiting for a position, employers can balance: How much must we pay for this desirable candidate? and How much should we pay to staff this position? Whittlesey, Maurer
23 Why establish a structure? Even though they may be responsible for managing costs, most managers strive to provide their employees with the highest possible compensation because they don t suffer directly from the increased cost and they benefit from being the nice guys. Whittlesey, Maurer
24 Why establish a structure? When individual managers make decisions regarding subordinate compensation, every unit is likely to receive dissimilar pay for similar tasks. Whittlesey, Maurer
25 Why establish a structure? Provides: Organizational consistency Reference for career development and predicting pay increases Both of which serve the objectives from the Prologue. Whittlesey, Maurer
26 How do you develop a Salary Structure? Through Compensable Factors and Pay Ranges Personick
27 Compensable Factors Definition: Any job attribute that provides a basis for determining the worth of the job. Singer, Francisco
28 Compensable Factors Employee-based examples : Education/training Experience Certification/licenses Unique SKA s Singer, Francisco
29 Compensable Factors Job-based examples : Customer relations/service Communications/ key interactions/ level of contact Supervisory responsibility Supervision received Job Complexity Problem solving Decision making (authority and impact) Working conditions Responsibility for assets Singer, Francisco
30 Compensable Factors Their use requires decisions regarding: weights degrees or levels Singer, Francisco
31 Pay Range Definition: The minimum to the maximum base rate of pay for employees in the same or similar job Often expressed pay grades Singer, Francisco
32 Range Width Definition: Percentage difference from the minimum to the maximum of a pay range Vary, but typically narrower for lower pay grades Rate minimums should attract qualified job candidates while rate maximums should be set to reward and retain high achievers Singer, Francisco
33 Range Progression Definition: The difference, or jump, from one grade to the next Vary by position type, but typically smaller for lower pay grades. Should be large enough to reflect progressive increases in compensable elements of the positions grouped together. Singer, Francisco
34 Range Midpoint Used to orient salary levels for example, the more highly rated or the most experienced employees are above the midpoint Generally, for white-collar workers, the midpoint represents a job's market value. Personick
35 Salary Structural Integrity A company that has invested time and effort in designing an equitable, competitive program must be willing to adhere to it, or there really is no program at all. Whittlesey, Maurer
36 Salary Structural Integrity Achieved through policies for Recruiting Counter Offers Promotions Lateral Moves Merit and ATB Increases
37 Concepts And now UF
38 UF Orientation Employee Population Faculty 84 Staff 169 Students and OPS 164 Total 417
39 UF Orientation Library Staff (Benefitted) Library types 118 Others IT 22 Non-IT 28
40 UF Orientation Library Faculty 9 month 3 Adjunct/Visiting 2 12 Month 79 Total 84
41 UF Orientation Library Faculty Ranks Assistant IN 2 Assistant UL 23 Associate IN 3 Associate UL 38 UL 15
42 UF Libraries Salary Systems Library Staff Library types (1) Others IT (2) Non-IT (3) Library Faculty Deans (4) Chairs and Associate Chairs (5) All others (6) Students and OPS (7)
43 UF Libraries Salary Systems Library Staff Library types (1) Others IT Non-IT Library Faculty Deans Chairs and Associate Chairs All others (2) Students and OPS
44 Salary Systems Library STAFF Library types
45 Salary Systems Library STAFF Initial Concerns & Issues- Comparison to prevailing wage Pay rates did not reflect technical qualities of positions or professional credentials of employees Existing classification structure and its administration were flawed
46 Salary Systems Library STAFF Issues: Classification Structure LTA and Archivist classifications were: inadequately defined not appropriate for the majority classified as Archivist Did not depict a hierarchy: Sr. LTA s v. LTA Supervisors
47 Salary Systems Library STAFF Issues: Classification Structure Program Assistant and Coordinator classifications had been utilized by a variety of library departments as best fit classifications for some positions performing library-specific duties.
48 Salary Systems Library STAFF Issues: Classification Structure Salary adjustments for promotions, demotions and lateral moves were inconsistent. Inconsistent rates used for recruitment.
49 Salary Systems Library STAFF Improving Classifications 2006 Staff Structure Reorganization Committee was charged Proposed new series of Library Assistant and Associate classifications Produced Classification Descriptions and Examples of Duties
50 Improving PD s Salary Systems Library STAFF 2007 UF staff Performance Management Initiative was launched All staff Position Descriptions were reviewed and updated that spring Submitted electronically and posted online
51 Salary Systems Library STAFF Review of Library Positions Each position s duties, as detailed in the PD, were compared to the Classification Descriptions and Examples of Duties, by Supervisor and employee Unit Department, and Division
52 Salary Systems Library STAFF Classifications Each position was mapped to the appropriate Library Assistant or Library Associate classification.
53 Salary Systems Library STAFF Classifications All mapping recommendations put forth by the divisions were reviewed by the Library Deans to ensure positions were mapped equitably and consistently across the different divisions of the libraries.
54 Salary Systems Library STAFF Mapped Classification Original # Library Assistant I Library Assistant II Library Assistant III Library Associate I Library Associate II Library Associate III MOTOR VEHICLE OPR 1 LIBRARY TECHNICAL AST 3 SECRETARY, SR 1 LIBRARY TECHNICAL AST 9 LIBRARY TECHNICAL AST, SR 16 LIBRARY TECHNICAL AST 3 LIBRARY TECHNICAL AST, SR 28 ARCHIVIST, SR 1 LIBRARY TECHNICAL AST 1 LIBRARY TECHNICAL AST SPV 1 LIBRARY TECHNICAL AST, SR 1 PROGRAM AST 2 ARCHIVIST 14 COMPUTER APPLICATIONS, CRD 2 1 LIBRARY TECHNICAL AST SPV 2 LIBRARY TECHNICAL AST, SR 3 PROGRAM AST 3 ARCHIVIST 4 ARCHIVIST, SR 7 ACADEMIC SUPP SVCS, CRD 1 8 ARCHIVIST 1 COMPUTER APPLICATIONS, CRD 2 1 ACADEMIC SUPP SVCS, CRD 1 8
55 UF Salary Systems Library STAFF Implementing Classifications Each position was reclassified to the appropriate Library Assistant or Library Associate classification.
56 UF Salary Systems Library STAFF Implementing Classifications Job vacancies for positions with primarily library-specific job duties are all posted as Library Assistant or Library Associate positions.
57 UF Salary Systems Library STAFF Job Groupings Salary Structure
58 Salary Systems Library STAFF Establishing Salary Structure Selected the 2006 ALA-APA Salary Survey (Non-MLS, Public and Academic)
59 Salary Systems Library STAFF Establish Ranges: width, midpoint, and progression Determined the target minimum, mean and maximum salaries for each of the new Library Assistant and Library Associate classifications. Sunday, Pfunter
60 2007 Salary Structure UF Salary Systems Library STAFF Classification Minimum Average Maximum Library Assistant I $20,581 $24,213 $27,845 Library Assistant II $22,639 $26,634 $30,629 Library Assistant III $24,903 $29,298 $33,692 Library Associate I $27,393 $32,227 $37,062 Library Associate II $30,133 $35,450 $40,768 Library Associate III $33,146 $38,995 $44,845
61 Salary Systems Library STAFF Now what? How do we create a distribution of wages for a population from an old (imperfect) system to a completely new staff classification structure?
62 Salary Systems Library STAFF Answer: Compensable Factors
63 Salary Systems Library STAFF Compensable Factors Selected Relevant Experience and Education They were given equal weight
64 Salary Systems Library STAFF Defined Levels Education Level Degree (1-7) 1 HS 2 AA/AS 3 BA/BS 4 Masters 5 MLS MLS and 6 Additional Masters 7 PhD
65 Salary Systems Library STAFF Collected data for each employee Education Level Degree (1-7) 1 HS 2 AA/AS 3 BA/BS 4 Masters 5 MLS MLS and 6 Additional Masters 7 PhD Education Level Years of Experience Mean Median 3 10
66 Salary Systems Library STAFF Compensable Factors The relative weight of the levels (degrees) for both of the compensable factors was established.
67 Salary Systems Library STAFF The average level of each compensable factor was assigned a weight of 1.0. Years of Experience Modifier Education Modifier Level
68 Salary Systems Library STAFF Calculations The compensable factors for each employee s education and relevant professional experience were averaged to arrive at an overall compensable factor for that employee.
69 Salary Systems Library STAFF Calculations This average was applied to the targeted salary midpoint for the classification to which the employee s position was mapped.
70 Salary Systems Library STAFF Calculations The resulting wage was the target individual wage (above, at or below the midpoint for the range).
71 Clear enough? Salary Systems Library STAFF
72 Salary Systems Library STAFF How about an example? See: Example of the Application of Compensable Factors
73 Salary Systems Library STAFF Outcome Salaries for employees in comparable positions are distributed, in a consistent manner, around a common midpoint oriented to the external market
74 Salary Systems Library STAFF Outcome 104 of the 119 employees whose positions were mapped to Library Assistant or Library Associate classifications were targeted for a salary increase
75 Salary Systems STAFF Implemented in 2007 (April and October)
76 Salary Systems STAFF Maintenance Effective 09/19/08, staff employees at UF received a 2% across the board pay increase Midpoint targets for the Library Assistant and Associate classifications were increased by 2%.
77 Salary Systems STAFF Maintenance Effective 07/01/10, staff employees at UF who met certain criteria received an across the board (ATB) pay increase equivalent to 1% of their annualized salaries. They also were eligible for merit increases. Midpoint targets for the Library Assistant and Associate classifications were increased by 1%.
78 Salary Systems STAFF Maintenance Effective 09/16/11 staff employees at UF received an ATB increase of 3% to help offset a legislative change that required employees to contribute 3% toward their retirement benefits. Midpoint targets for the Library Assistant and Associate classifications were increased by 3% to reflect this event.
79 Salary Systems STAFF Salary Structure From implementation to present the salary structure has been adhered to for offers, promotions, and other career events for staff (Using the same method as the example) (See George A. Smathers Libraries Staff Base Salaries)
80 Salary Systems STAFF Salary Structure Delivers: salary discipline and consistency Promotions and demotions Recruitment (internal and external) Needs: Regular ATB raises to sustain (external equity) Merit to differentiate based on performance and credentialing (internal equity)
81 Salary Systems Faculty Faculty, All others
82 Salary Systems Faculty Issues Compression Ad hoc salary decisions based (inconsistently) upon rank assumptions of job worth and market demand Lack of transparency
83 Salary Systems Faculty Joint Committee formed in 2008 Charge: Establish a market equity design with an internally and externally equitable salary structure Final report submitted March 2009
84 Salary Systems Faculty Joint Committee Findings: Association of Research Libraries (ARL) Salary Survey is a serviceable external measure
85 Salary Systems Faculty Joint Committee Findings: ARL US, public university libraries constitute a suitable representation of UF s peer institutions
86 Salary Systems Faculty Joint Committee Findings: ARL s non-administrative job types are the most reasonable basis for external linkage
87 Salary Systems Faculty Joint Committee Findings: Applying locally defined compensable factors allows for internal equity Advanced degrees held in addition to the MLS, which are applicable to the job assignment A limited number of faculty positions require uncommon skills, such as foreign language fluency
88 Salary Systems Faculty Joint Committee Findings: Salaries should reflect differences in librarian rank and length of service years of service represented the midpoint of the distribution for ARL data and, with the UF rank of Associate UL, represented UF s population midpoint
89 Salary Systems Faculty Joint Committee Findings: Performance is an important component of an equitable salary structure
90 Salary Systems Faculty Establishing a Faculty Salary Structure Next turn at bat: Library Administration
91 Salary Systems Faculty ARL Salary Survey My Take Comprehensive Broad participation among ARL HR officers, including UF Provides comparison data for UF s peer institutions
92 Salary Systems Faculty ARL Salary Survey My Take Large data pool offers higher validity Includes position specific data can assume HR Officers would likely interpret definitions similarly
93 Salary Systems Faculty ARL Salary Survey My Take Updated annually Easy to rework figures based on current year s data Joint committee used Implementation based on Includes data from law and medical libraries
94 Salary Systems Faculty ARL Salary Survey My Take Plus the data is accessible
95 Salary Systems Faculty ARL Salary Survey My Take All of these factors make this the go to salary reference for ARL institutions
96 Salary Systems Faculty ARL Salary Survey My Take Challenges Tables are numerous but statistics and tables are limited for our purposes This requires the deriving of data
97 Salary Systems Faculty ARL Salary Survey My Take Challenges Definitions of job codes Subject Specialist - primarily build collections, but may also offer specialized reference and bibliographic services Reference librarians, both general and specialized Public Services, non-supervisory, except reference librarians
98 Salary Systems Faculty ARL Salary Survey - Analysis
99 Salary Systems Faculty ARL Salary Survey - Analysis Reminder: ALL calculations used in UF Faculty Market Equity are reflected in the spreadsheet posted at Note: There you can also find a primer on weighted averages
100 Salary Systems Faculty ARL Salary Survey Tables of Interest Table 25: Table 26: Figure 5: Table 20: average salaries by position and geographic region average salaries of US librarians by position and years of experience average salaries for Functional Specialists average salaries by position and years of experience
101 Salary Systems Faculty ARL Salary Survey - Analysis Comparison of Regions Note: Derived from Table 25 Required establishment of core librarian positions See: Calc of Regional Factor
102 Salary Systems Faculty ARL Salary Survey - Analysis Calculation of average salaries for subject specialist, reference, and public services; and catalogers and technical services Note: Derived from Table 26 See: WAVG for TS, Cat., & SS-Ref-PS
103 Salary Systems Faculty ARL Salary Survey - Analysis Average salaries for functional specialist provided in Figure 5 See: AVG for FUNCTSPEC
104 Salary Systems Faculty ARL Salary Survey - Analysis Establish years of experience and job type midpoints Note: Derived from Table 26 See: Calc of Exp Factors
105 Salary Systems Faculty Findings 1. Variations exist between, regions and type of entity (public v. private) 2. Years of experience is a stable predictor of salary
106 Salary Systems Faculty Findings 3. Medical positions would be addressed with ARL numbers (versus MLA)
107 Salary Systems Faculty Findings 4. Average salaries vary significantly by job type See: Combined Midpoints
108 Salary Systems Faculty Decisions necessary to create a Faculty Salary Structure
109 Salary Systems Faculty Decisions: Relevant Market We would use South Atlantic, Public and Private Applying a factor of.9383 to national averages
110 Salary Systems Faculty Decisions: We would determine a base salary specific to each faculty member based upon Position-specific factors (e.g. job type ) Individual-specific factors (e.g. experience)
111 Salary Systems Faculty Decisions: Position Groupings We would merge Subject Specialist, Reference, and Public Services job types
112 Salary Systems Faculty Decisions: Stipends for department chairs and associate chairs excluded from the base salary calculations See: Stipend for Smathers Libraries
113 Salary Systems Faculty Decisions: Salary specific to each faculty member based upon 1. Position-specific factors Job Type Language: Adjust up 9%, if foreign language required for position
114 Salary Systems Faculty Decisions: Salary specific to each faculty member based upon 2. Individual-specific compensable factors: Rank: Adjust up or down, from Associate, by 9% for Assistant UL and UL Length of Service: Adjust up or down for applicable experience above or below ARL average
115 Salary Systems Faculty See: resulting Faculty Salary Structure
116 Salary Systems Faculty Implications: Faculty in similar job types form peer groups (position groupings) Other factors will differentiate their actual salaries (compensable factors)
117 Salary Systems Faculty Decisions: Salary specific to each faculty member based upon 2. Individual-specific compensable factors (continued): Advanced Degrees: Adjust up for additional relevant advanced degrees (maximum of $5,000) Performance: Adjust up to retain effect of 2010 merit increases
118 Salary Systems Faculty Decisions regarding Performance and Eligibility: Cap all raises at 18% Cap raises at 9% for faculty with Achieves (or no evaluation) in primary responsibility in either of the past 2 years Exclude faculty with Does Not Meet in any category in either of the past 2 years Does not preclude the ability to apply for individual market equity evaluations
119 Salary Systems Faculty Application See: Examples of Salary Calculation
120 Salary Systems Faculty Communication See: corresponding Library Faculty Market Equity Assessment Report
121 To summarize: Salary Systems Faculty
122 Salary Systems Faculty 1. External equity based on: Job type (Midpoint for ranges) Geographic region (Application of ATB Factor)
123 Salary Systems Faculty 2. Internal equity based on: Years of experience (with UF Ranks imposed) Special requirements of the position SKA (Language) Administrative (Stipends) Educational credentials Performance (inclusion of past merit & qualifiers)
124 Salary Systems Faculty Results Total eligible: 76 faculty 49 (64%) targeted to receive raise 19 (25%) already at or above market equity 8 (11%) do not meet minimum requirement
125 Salary Systems Faculty Results Of the 49 targeted to receive raise 7 faculty capped at 18% 7 faculty capped at 9%
126 Salary Systems Faculty Maintenance: See: Library Search Offer
127 REFERENCE Terpstra, D., & Honoree, A. (2003, November). The Relative Importance of External, Internal, Individual and Procedural Equity to Pay Satisfaction: Procedural Equity May be More Important to Employees Than Organizations Believe, Compensation & Benefits Review, 35 (6), Singer, P. M., & Francisco, L. L. (2009). Developing a compensation plan for your library. Chicago: American Library Association. Romanoff, K., Boehm, K., & Benson, E. (1986, December). Pay Equity: Internal and External Considerations. Compensation & Benefits Review, 18 (6), Bloom, M. (2004). The Ethics of Compensation Systems. Journal of Business Ethics, 52 (2), Duda, F. (1989, Summer) Developing Compensation Systems in Academic Libraries. Library Trends, 38 (1), Personick, M. (1984, December). White-Collar Pay Determination under Range-of-Rate Systems, Monthly Labor Review, 107, (12), Whittlesey, Z., & Maurer, C. (1993, July). Ten common compensation mistakes, Compensation and Benefits Review, 25 (4), Sunday, K., & Pfuntner, J. (2008). How widely do wages vary within jobs in the same establishment? Monthly Labor Review, 131(2),
128 Invitation: For further discussion, please contact me at or
129 Methods for Establishing and Maintaining an Equitable Salary Structure THANK YOU!
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