Staff Compensation Program – Phase 2 Internal Equity Adjustments October 2005.
Transcript of Staff Compensation Program – Phase 2 Internal Equity Adjustments October 2005.
Staff Compensation Program – Phase 2
Internal Equity Adjustments
October 2005
Today’s Agenda
Background Information
Methodology
Process
Implementation
Staff Employment Value Strategy
Salary levels that are competitive with Lehigh’s competition in the marketplace
Cash based rewards for performance Benefits that are equitable and competitive Career opportunities for employees Professional development that is aligned with
department goals and University’s strategic plan Work that is interesting and engaging Affiliation with a nationally recognized university
20072006
Implement Market Referenced Job Evaluation Program (1/1/05)
Develop process to address internal equity concerns
Develop Job Family Accountability and Skill Guides
Establish Job Family Career Development Resource Guides
January Equity Adjustments
Performance Management
Complete alignment of training and staff development with SEVS
Complete comprehensive benefits allocation review
20052004
January Equity Adjustments
Complete Job Family Accountability and Skill Guides
Complete Job Family Career Development Resource Guides
Begin comprehensive benefits allocation review
Begin alignment of training and staff development with SEVS
Our Timeline
Develop Staff Compensation Program
Staff Compensation Program
Phase 1 – External Equity
Assign positions to salary grades that mirror the pay rates found in the job families and labor markets in which Lehigh competes
Phase 2 – Internal Equity
Determine appropriate position in range for individual staff members
Market Referenced Program
The market for each job family determines the salary grade, and knowledge, skills, experience, and performance determine position in range.
Job Role, Responsibilities
and Skill Requirements
Job Role, Responsibilities
and Skill Requirements
Salary GradeSalary Grade
Knowledge, Skills, Experience and Performance
Knowledge, Skills, Experience and Performance
RecommendedBase Salary
RecommendedBase SalaryPosition in RangePosition in Range+ =
Determining Position in Range
What factors contribute to a recommendation of position in range?
Knowledge, Skills, Experience
Knowledge, Skills, Experience
Overall MeasureOverall Measure
PerformancePerformance
Position in RangePosition in RangeIndividual MeasureIndividual Measure+ =
Possible Approaches
Set targets based on years of service – or years in position
Set targets based on performance appraisal ratings for the current year – or the last five years
Set targets based on individual competencies
Etc.
Back to the Bank --Compare 2 Customer Service Managers (CSM) –
Who should earn more?
Jane Sue
Hire Date January 2000 September 1990
Position History CSM since January 2000 CSM since April 2004 + Teller from January 1990 until March 2004
2004 Performance Appraisal
Rated as “Outstanding” by an easy rater
Rated as “Meets Expectations” by tough rater (new supervisor)
5 year performance history
2004 Outstanding
2003 Outstanding
2002 Above Average
2001 Above Average
2000 Meets Expectations
2004 Meets Expectations
2003 Above Average
2002 Above Average
2001 Outstanding
2000 Outstanding
Based on Hire Date --
Who should earn more?
Jane Sue
Hire Date January 2000 September 1990
Based on Position History
Who should earn more?
Jane Sue
Position History CSM since January 2000 CSM since April 2004 + Teller from January 1990 until March 2004
Based on the 2004 Appraisal
Who should earn more?
Jane Sue
2004 Performance Appraisal
Rated as “Outstanding” by an easy rater
Rated as “Meets Expectations” by tough rater (new supervisor)
Based on 5 years of Performance --
Who should earn more?
Jane Sue
5 year performance history
2004 Outstanding
2003 Outstanding
2002 Above Average
2001 Above Average
2000 Meets Expectations
2004 Meets Expectations
2003 Above Average
2002 Above Average
2001 Outstanding
2000 Outstanding
?
Who should earn more?
Jane Sue
Hire Date January 2000 September 1990
Position History CSM since January 2000 CSM since April 2004 + Teller from January 1990 until March 2004
2004 Performance Appraisal
Rated as “Outstanding” by an easy rater
Rated as “Meets Expectations” by tough rater (new supervisor)
5 year performance history
2004 Outstanding
2003 Outstanding
2002 Above Average
2001 Above Average
2000 Meets Expectations
2004 Meets Expectations
2003 Above Average
2002 Above Average
2001 Outstanding
2000 Outstanding?
And, what about?
Individual competencies
Educational background
Total work experience before the bank
Etc.
What criteria are valid?
Lehigh’s Criteria
Time in Position and Classification
Performance history as supported by merit increases rather than appraisal rating
How to set the targets?
Fixed percentages or dollar amounts for each year in the position and classification
Ranges of salary targets for each year in the position and classification
Fixed percentages or dollar amounts for relative merit adjustments
And what are those amounts?
How should we determine the percentages or dollar amounts?
What should they be based on?
Building a Model
The equity model was developed in consultation with University leadership over the spring and summer. We needed answers to these two questions:
What do we want to accomplish with the equity adjustments?
Where will we find the appropriate salary values to use in building the model?
Our Goal –
To define an appropriate salary for each staff member based on time in role and individual performance
Our salary change measures:
Lehigh’s actual staff salary budget history since 1989.
An Example – Back to the Bank
Jane Sue
Hire Date January 2000 September 1990
Position History CSM since January 2000 CSM since April 2004 + Teller from January 1990 until March 2004
2004 Performance Appraisal
Rated as “Outstanding” by an easy rater
Rated as “Meets Expectations” by tough rater (new supervisor)
5 year performance history
2004 Outstanding
2003 Outstanding
2002 Above Average
2001 Above Average
2000 Meets Expectations
2004 Meets Expectations
2003 Above Average
2002 Above Average
2001 Outstanding
2000 Outstanding
New Salary Program at the Bank
Effective January 1, 2005: CSM positions assigned to Grade 3A
Salary range for Grade 3A: $30,000 to $48,000
Jane and Sue have salaries increased to the range minimum of $30,000
Setting salary targets for CSMs
The bank will use their own salary budget history over the last 5 years to determine appropriate salary targets for the Customer Service Managers.
The Bank’s Salary Budget History
Year
Range Movement
Salary Adj. Budget
2005 1.5% 3.5%
2004 2.0% 3.5%
2003 2.0% 4.0%
2002 1.5% 3.0%
2001 1.5% 3.5%
The Bank’s Salary Growth
Year
Range Movement
Salary Adj. Budget
Salary Growth within Range
2005 1.5% 3.5% 2.0%
2004 2.0% 3.5% 1.5%
2003 2.0% 4.0% 2.0%
2002 1.5% 3.0% 1.5%
2001 1.5% 3.5% 2.0%
Moving through a range
Minimum Maximum
Minimum Maximum
Minimum Maximum
Minimum Maximum
2002
2003
2004
2005
Average salary of all Grade 3A employees hired in 2002
At Minimum
3.53% over minimum
2% over minimum
5.6% over minimum
The 2002 Hiring Class
Target for 2002 Hiring Class
Developing Salary Targets for All
Year in Position
Budget Year
Total Growth Over Time
Salary Target
2004 2005 2.0% $30,600
2003 2004 3.5% $31,050
2002 2003 5.6% $31,680
2001 2002 7.2% $32,160
2000 2001 9.3% $32,790
Assume Salary Grade Minimum of $30,000
Targets for Sue and Jane
Year in Position
Budget Year
Total Growth Over Time
Salary Target
2004 2005 2.0% $30,600
2003 2004 3.5% $31,050
2002 2003 5.6% $31,680
2001 2002 7.2% $32,160
2000 2001 9.3% $32,790
Assume Salary Grade Minimum of $30,000
Target for Jane
Target for Sue
What a Target Represents
The salary target represents the average salary that would be paid to all individuals in the salary grade who were hired in the same year.
It does not represent the salary that each individual employee should earn.
Determining Salaries
Jane and Sue both paid $30,000 at 1/1/05
Step 1 – Targets from HR Target for Sue = $30,600 (+/-) for performance Target for Jane = $32,790 (+/-) for
performance
Step 2 – Salary Determined by Branch Manager Salary for Sue = $30,300 Salary for Jane = $33,500
Setting Salary Targets at Lehigh
Applying the Bank Example
Our Goal –
To define an appropriate salary for each staff member based on time in role and individual performance
Our salary change measures:
Lehigh’s actual staff salary budget history since 1989.
Setting the Targets
Targets for individual staff member salaries are determined based on:
Length of time in position and classification
Actual potential for salary growth since assuming that position and classification
Setting the Salaries
Department Heads and Stem Leadership will set actual salaries. They will consider:
Targets provided by HR
Employee performance history as evidenced by actual merit increases received
The Process at Lehigh
Confirmation of position and classification dates by supervisors and staff
Development of targets by HR
Determination of salaries by area leadership and department heads
Communication of salary changes to staff