New Staff Compensation System – Informational Meeting Staff Compensation Subcommittee

1. New Staff Compensation System – Informational MeetingStaff Compensation Subcommittee Spring, 2008

2. Slides Available on the Web • Session scheduled to last 90 minutes • Requires us to move quickly through slides • A lot of information to cover • Please save questions for the end • This presentation is available on the web on the Human Resources web site: www.missouristate.edu/human • Select the Staff Compensation Project link • Select Open Forum Presentation

3. Staff Compensation Subcommittee • Subcommittee of the University Compensation Committee • Membership: • Ben Boslaugh, Facilities Maintenance • Wendy Ferguson, Development & Alumni Relations • Mary Lynne Golden, Office of the Provost • Lyn McKenzie, Human Resources • Matt Morris, Business & Support Services, West Plains campus • Mary Routh, Human Resources • Gary Stewart, Residence Life & Services • Greg Burris, Administrative & Information Services (chair) • Steve Thomas, Management Department (internal consultant)

4. Outline Why we are doing this Definitions Actions that have been completed Actions currently in progress Explanation of the Grade Notification Form How the Compensation Matrix will be used Q&A

5. Why We Are Doing This

6. Why We Are Doing This • By the summer of 2006 the University Compensation Committee advanced a set of recommendations that were adopted by the Board of Governors. These recommendations included: • The existing grade-and-step system should be abandoned in favor of a set of open pay ranges • Both classified and unclassified staff should be in the same pay system • Future pay increases should be determined by a compensation matrix that bases pay increases on a combination of equity and performance

7. Why We Are Doing This • The Compensation Committee’s final report is available on the web at . . . www.missouristate.edu/president/compensation/default.htm

8. Why We Are Doing This • The Bottom Line . . . • The “old” system was unfair • The old classified “grade-and-step” system was disliked by those at the top step (33% of classified employees) • The reward for longevity was . . . “budget dust” salary increases • Unfair to good performers in classified and unclassified system • Low and mediocre performers received same increase as good performers • What was the incentive to perform well?

9. Why We Are Doing This • This meant a lot of work needed to be completed . . . • A systematic performance appraisal processneeded to be in place • All job descriptionsneeded to be accurate and up-to-date • Each job needed to be evaluated and slotted into a pay grade that reflects its value within its labor market • Cost center administrators needed to use the Compensation Matrixto determine annual pay increases based upon performance and equity

10. Definitions

11. Definitions • A “job family” is… • A grouping of jobs with similar characteristics • A “job evaluation plan” is… • Describing a set of factors that we value in the work • Assigning point values to each factor • Rating each job on the factor and calculating its point score

12. Definitions • A “cost center” is . . . an organizational unit that manages a fund or group of accounts within a fund. Examples include: • Operating Fund • Academic college (e.g., College of Arts & Letters) • Major administrative division (e.g., Student Affairs) • Auxiliary System Fund • Each individual business unit (Bookstore, PSU, Residence Life, Taylor Health, Athletics, HSC/PSC, Transit System) • Designated, Research, Income Accounts, Recharge Centers, Federal Match and Indirect Cost Funds • Each individual fund is treated as a separate cost center • These funds include the Income (1017) accounts, Juanita K. Hammons Hall, Broadcast Services, Grants and Contracts Accounts, and so forth

13. Actions That Have Been Completed

14. Actions That Have Been Completed • Implementation of a new performance evaluation tool • Appraisal Development Plan (ADP) • Administered October 1 – January 31 each year • Much more comprehensive appraisal tool • Includes goal setting and evaluation of progress toward goals • Includes Performance Improvement Plan (PIP) for sub-standard performers • All employees attended training session on ADP • All supervisors attended additional training on administration of ADP • Recalibration of performance scoring

15. Actions That Have Been Completed • Jobs were divided into four job families • Job evaluation plans were developed for each job family • Job Descriptions were updated • 634 job descriptions were reviewed • Each cost center administrator was responsible for ensuring the job descriptions within their area were reviewed and updated as necessary

16. Actions That Have Been Completed • Each job description was evaluated • 80 of our peers served on one of eight job evaluation committees • Job Evaluation Committees selected appropriate degree levels (not academic degrees) associated with each job evaluation factor for each job description • Degree levels were statistically weighted to develop a point total associated with each job • Point totals were used to develop new pay grades

17. Actions That Have Been Completed • Job Family 1 – Administrative support and clerical, financial and student services, library and other paraprofessional employees • 367 incumbents • 81 jobs • Required extensive analysis • 30 employees (our peers) served on three job analysis advisory committees • Each incumbent completed a task inventory

18. Actions That Have Been Completed • Job Family 1 (continued) • 244 administrative support incumbents in multiple-incumbent jobs were personally interviewed to identify the job duties performed by each incumbent • New job descriptions were written to describe the work actually performed • Work was classified by overall function and level of complexity • Individual positions were slotted into new job titles and job descriptions based on duties and complexity of work

19. Actions That Have Been Completed • Job Family 2 – Skilled crafts and trades, protective services occupations, custodial, and other services • 391 incumbents • 94 jobs • Job descriptions reviewed and updated by supervisors

20. Actions That Have Been Completed • Job Family 3 – Information systems employees, electronic and media system technicians, broadcast engineers, and other technical/computer positions • 120 incumbents • 70 jobs • Job descriptions reviewed and updated by supervisors • Incumbents in the Distributed User Support Specialist and Instructional Technology Support Specialist jobs were interviewed to determine job duties and update job descriptions

21. Actions That Have Been Completed • Job Family 4 – Executive and managerial employees, administrative employees, and professional and paraprofessional employees • 481 incumbents • 375 jobs • Job descriptions reviewed and updated by supervisors

22. Actions That Have Been Completed • Some jobs were not included in the job evaluation system and not assigned to a job family • Jobs in which incumbents had faculty appointments • Senior administrative jobs • Vice presidents • Legal counsel • Coaches and coaching staff • Certain medical professionals • Positions not assigned to a job family are still subject to the same performance evaluation process and the same salary increase pool percentage

23. Actions That Have Been Completed • Jobs were evaluated by the eight Job Evaluation Committees • Ratings were analyzed and a point score was developed for each job • For each job family, jobs with similar point values were grouped into grades • The grade number • First digit identifies the job family • Second digit identifies grade level within the job family

24. Actions That Have Been Completed • Determine pay range for each new grade • Pay ranges were developed using multiple salary surveys associated with the jobs in that pay grade • Mid-point of pay range is set to “market” (50th percentile) • The pay range minimum and maximum levels are set at approximately the 25th and 75th percentiles of the market rate, based upon the relevant salary surveys • New salary ranges are generally set at a higher level than the old “classified” salary ranges • The “market” value sometimes fell at step 7, 8, or 9 of the old salary ranges

25. Actions That Have Been Completed • Looking at individuals in new pay ranges • Several positions fall below the bottom of pay ranges (green circled) • A very few individuals are above the top of the new pay ranges (red circled) • Where are we relative to market? • Overall compa ratio of .946 tells us that on average we are about 5.4% under market pay levels today

26. Actions That Have Been Completed • Per the salary objectives listed in the University’s long-range plan, recommendations concerning salary grade adjustments will be made to the President annually by the Executive Budget Committee based upon compensation/cost indicators and the projected state appropriations level and other revenue for the next year. 

27. Actions That Have Been Completed • Recommended annual adjustment using the Employment Cost Index (ECI) • Different from the Consumer Price Index (CPI) • ECI is typically preferred by compensation professionals • ECI is a better measure of changes in salary levels • ECI is less volatile than the CPI • Recommend “gut check” comparison to salary surveys every third year • Recommendations are subject to adequate revenue and other cost considerations

28. Actions Currently In Progress

29. Actions Currently In Progress • Development of Salary Administration Rules • Human Resources is developing a proposal for determining salaries related to . . . • Promotions • Transfers • New hires • Accommodating salary increases that would result in lower than minimum or higher than maximum salary levels within each grade

30. Actions Currently In Progress • Encouraging Cost Center Administrators to consistently calibrate the performance evaluation ratings within their cost center • Encouraged to review the draft performance evaluations to be delivered by their direct reports prior to the actual performance evaluation session • Make adjustments, if necessary, prior to the actual evaluations being given • Recommended performance evaluation scores should be adjusted if one or more direct reports is perceived as being an “easy grader” or “tough grader” relative to the other direct reports within the cost center • Goal: Fair, consistent performance evaluation scores across all units within the cost center

31. Actions Currently In Progress • Development and refinement of Compensation Matrix • Development of spreadsheets • Development of guidelines for use • Includes use of a “Compensation Matrix Advisory Committee” for the first year on a trial basis • Development of “Compensation Matrix” training for Cost Center Administrators

32. The Grade Notification Form

33. Grade Notification Form • Distributed to all employees on January 25, 2008 • Your Grade Notification Form indicates . . . • The Job Family to which your job is assigned (1, 2, 3, or 4) • Current salary, job title, grade (if applicable) and salary range (if applicable) • New job title (if changed), new grade number, and new grade’s minimum, mid-point, and maximum

34. Grade Notification Form • Additional information available on the web at www.missouristate.edu/human (select Staff Compensation Project) • Job descriptions now include job evaluation degree levels • Job evaluation plans for each job family • Pay grades and salary ranges for each job family

35. Grade Notification Form • “Red-circled” employees – current salary is already higher than their grade’s maximum • Future annual salary increases will be 50% of what the Compensation Matrix dictates until pay grade escalates to catch them • There are 8 “red-circled” employees prior to the July 2008 salary increases • Depending on the size of the 2008 salary increase, additional staff could be “red-circled” • Responsibility of Cost Center Administrator to notify

36. Grade Notification Form • “Green-circled” employees – July 1, 2008 salary is lower than their grade’s minimum • After the FY09 (July 1, 2008) salary increases are applied, the salaries for these employees will be increased to their grade’s minimum • Number of “green-circled” employees and total recurring cost will vary until July 1, 2008 • Responsibility of Cost Center Administrator to notify

37. Grade Notification Form • Appeals Process • Actions that may be appealed: • Degree levels selected for the job description during the job evaluation process • Job family to which the job has been assigned • Job title and/or description assignment for Job Family 1 multiple-incumbent jobs

38. Grade Notification Form • Appeals Process (continued) • Actions that may not be appealed: • Pay grade designations • Salary range associated with a pay grade • Issues associated with how job description is written (reclassification issues) • Appeals must be filed with Human Resources by February 11, 2008

39. The Compensation Matrix

40. Compensation Matrix • Will be used to determine FY09 salary increases (effective July 1, 2008) • The matrix uses equity and performance to determine individual pay increases • Equity is defined as the position in the pay range (how your salary compares to your job’s “market” pay level) • Performance is determined by the annual performance evaluation • In years when a small salary increase pool is available, the Compensation Matrix may not be used

41. Compensation Matrix • Administered by each Cost Center Administrator • Each cost center’s matrix will be unique each year • Salary pool amounts may vary each year • Distribution of employees within market quartiles will vary each year • Distribution of employee performance evaluation scores will vary each year • Each Cost Center Administrator may optionally use up to 5% of their salary increase pool for special equity adjustments as required

42. Compensation Matrix • One axis is equity relative to “market” • Matrix axis divided into four quartiles • Each employee will be assigned to a quartile based upon how their current salary compares to “market” pay • Guiding Principle: • Those in lower pay quartiles are to receive higher percentage pay increases than those in higher pay quartiles, all other things being equal

43. Compensation Matrix • The other axis is performance • This axis will be divided into 5-8 performance categories based upon “natural breaks” in performance evaluation scores within cost center • Each employee will be assigned to a performance category based upon their performance evaluation score • Guiding Principle: • Those in higher performance categories are to receive higher percentage pay increases than those in lower performance categories, all other things being equal • Employees with unsatisfactory performance may or may not receive a pay increase

44. Compensation Matrix • Since “equity” axis will be divided into 4 segments and “performance” axis will be divided into 5-8 segments, each Compensation Matrix will have 20-32 cells • Each cell will be assigned a salary increase percentage • Total of all salary increases within a cost center’s matrix cannot exceed the amount in their salary increase pool • Will require a series of “what if” scenarios to achieve balance

45. Sample Compensation Matrix

46. Compensation Matrix • Compensation Matrix Advisory Committee • Advise Cost Center Administrator in development of performance categories (identifying natural breaks in scores) and participate in determining actual salary increase percentages per cell • Will try for one year, then evaluate effectiveness • If retained, membership terms will be staggered to promote continuity from year-to-year • Membership must be representative of the division and will contain no fewer than five members

47. Questions?