Career and Compensation Program

Employee Information SessionsApril 23 – May 11, 2012

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Today’s Agenda

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Content Timing

Overview of the Career and Compensation Program 5 min

Compensation Program 20 min

Implementation of Compensation Program 20 min

Career Program 15 min

Frequently Asked Questions 30 min

Overview of the Career and Compensation Program

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Why Focus on Career and Compensation?

UR Career and Compensation Program will help UR remain an employer of choice and help ensure the following:

• The recruitment and retention of top talent

• Pay aligned to our competitive market

• Internal equity in pay among our employees

• Opportunities for our employees to grow and understand what is required with different career levels across the University

• The foundation on which UR can better manage pay for performance

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The University is committed to providing employees with market competitive pay and opportunities to grow and develop within our Institution.

Outcomes of the New Program Key outcomes of the new program include:

• Compensation Strategy: Describing the role of pay and UR’s expectations for the management of pay for attracting, retaining, and rewarding employees at the University

• Compensation Structure: Enabling UR to manage compensation competitively against the market through market-based salary grade ranges

• Compensation Policies: Providing policies for managing compensation at the University to help ensure internal equity and consistent application of the program

• Career Structure and Policies: Provides employees with a roadmap for developing their skills and competencies in order to advance.(Still in development.)

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These outcomes will be available in May on the Human Resources website. Information on the Career Structure will be available later in the year.

The objectives were accomplished through the following four phases:

Phase 4: Planning for Implementation, Costing

and Training

October 2011 – May 2012

Phase 3: Policies and Processes

September 2011 –

January 2012

Phase 2: Career and Compensation

Program

March – September 2011

Project Phases

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· Update UR’s compensation strategy, including identification of compensation’s appropriate role in the overall Employment Value Proposition

· Development and confirmation of comparison markets for compensation assessment

Phase 1: Compensation

Strategy

January – March 2011

· Completion of market pricing and assessment of pay as compared to market

· Development of draft career architecture

· Establishment of a new pay structure for exempt and non-exempt employees

· Development of compensation policies and procedures

· Development of detailed implementation plan including training, automation, and ongoing communications

· Finalized grade placement of positions into the new structure

· Detailed cost of implementation analysis

· Manager Training and Employee Information Sessions

Full implementation of the new compensation program will occur on July 1, 2012.

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Overview of the Career and Compensation Program

What the Program Is

• A complete review of the compensation philosophy, structure and policies to help ensure pay is fair and can be linked to the job and performance

• An update of our comparison markets and data sources to help ensure UR can compete for talent

• A program to provide market competitive compensation to all our jobs

• A guidebook for employees to know how to develop in preparation for new opportunities as they occur in the future

• A framework to better manage pay for performance

What the Program Is Not

• A slight modification of the current compensation structure, it is entirely new, developed with significant input from VPs and others in the organization

• A step-rate program in which people get automatic increases

• A point factor or system that gives increases based on small changes in the job or skills

Compensation Program

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UR’s Compensation Strategy

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Role of Pay

The University of Richmond will maintain a career and compensation program directed toward attracting, retaining and rewarding a highly qualified and diverse workforce to serve students, faculty and staff. Pay will be set at levels that are competitive with the University’s comparison markets.

Work/Position Valuation

A position’s grade is determined based on an evaluation of both the external competitive market for the position, as well as the relative grade among similar positions across the University.

Comparison Markets

The University benchmarks its pay against organizations with similar characteristics. Different market comparisons are used for different positions across the Institution based on the type of position.

Pay Systems and Delivery

Base salary is the primary means of pay delivery at the University. Annual merit increases are the primary method for salary increases, but market adjustments may also be considered when deemed necessary.

Annual Performance

Increase

Annual salary increases shall be based on the performance of an individual and the contribution he/she makes to the institution, within budget parameters.

CareerThe University provides staff with meaningful career opportunities that include opportunities for growth.

Communication/ Openness

Information about pay ranges, market competitiveness, how pay decisions are made, how performance is reviewed and career definitions, will be publicly available to the University community. However, information on individual pay will remain confidential between the University and the individual.

UR’s Compensation Strategy continued

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Roles and Responsibilities

President’s Cabinet: Communicate openly and clearly with the University community on the career compensation program design and its administration. Endorse compensation and performance management design and support ongoing administration in accordance with program guidelines.

Managers and Supervisors: Understand the career, compensation and performance management philosophy and policies, communicate effectively on matters relating to career and compensation, partner with HR to deliver consistent practices. Actively participate in the University's performance feedback and development program.

Employees: Understand the career, compensation and performance management philosophy and policies, ask questions to managers and supervisors when clarification is needed. Actively participate in the University’s performance feedback and development process.

Human Resources: Partner with managers and supervisors to administer and interpret career, compensation and performance philosophy and policies.

UR’s Comparison MarketsThe comparison market for each survey source depends on the type of position being assessed.

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Position Type

Senior Administrators

Mid-level Administrators

Non-Exempt Employees Athletics

CUPA-HR surveys (Higher

Education)

Schools with operating budgets between $100M–$900M from the combined list of top 50 liberal arts, top 50 business, and top 50 law schools, plus VCU and UVA

Schools with operating budgets between $100M–$900M from the combined list of top 50 liberal arts, top 50 business, and top 50 law schools, plus VCU and UVA

Schools with operating budgets between $100M–$900M from the combined list of top 50 liberal arts, top 50 business, and top 50 law schools, plus VCU and UVA

Division 1 schools with operating budgets between $100M – $900M from the combined list of top 50 liberal arts, top 50 business, and top 50 law schools, plus VCU and UVA Plus A10 and CAA schools

Towers Watson surveys

National, not for profit, FTE 1,000 – 4,999

Southeast, all organizations

Richmond-Norfolk, VA, all organizations N/A

Mercer surveys

National, FTE 1,000 – 3,500

Southeast, all industries

Richmond, all industries N/A

Compensation Program Key Terms• Benchmark Jobs:

– Jobs identified as having a market match after review of UR job descriptions and job descriptions defined in their survey sources

– Matches vetted by managers in each division as well as HR– Listing of benchmark jobs is provided on the URHR website

• Non-Benchmark Jobs: – Jobs unique to the University and difficult to find comparable

external matches– May have multiple functions and responsibilities or may be

designed exclusively to meet a specific UR need– Compared internally to benchmark positions with similar

knowledge and skills and job scope to determine market value and placement into the salary structure

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Compensation Program Development ProcessThe development of the compensation program followed best practice within Higher Education.

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· Collected national, local, higher education and general industry data, depending on the type of job

· Collected 50th (median) percentile market data for each benchmark job

· Approximately 350 jobs (50% of jobs covering 65% of the employee population) was benchmarked

· Used only quality credible sources of data

2. Analyzing the Market

1. Understanding Position Content and

Position Matching

3. Building the Salary Structure

· Determined structure that would meet the specific needs of UR based on market results

· Created 12 salary grades structure with competitive salary ranges

· Wide grades to allow for growth within a job

4. Placing Jobs Into the Structure

· Benchmark positions placed by market median value and internal relationships, validated by VP’s and their direct reports

· Benchmark jobs placed into the structure based on closest midpoint in the salary structure

· Non-benchmark positions placed by internal relationships; placement of positions validated by VP’s and their direct reports

· Used current position descriptions to match UR positions against competitive market data

· Based on position content, requirements, scope of accountability, and institutional size

· Matched to survey description if about 75% of position content aligns

· Reviewed multiple times with HR, Vice-Presidents and their direct reports. Final Matches were approved by VPs and Direct Reports

UR’s Compensation Structure

• Benchmark jobs placed into the salary structure based on the closest midpoint. For example: A job with a market median value of $33,000 was placed into grade 3

• UR salary grades overlap to allow for flexibility to pay for a range of individual skills, experience, and performance within each grade

• The width of the grade, often referred to as “range spread,” increases as the variation in experience, skills, and competitive pay for the positions in the grade increases

• The salary grade helps maintain competitiveness with the external market and ensure internal equity among compensation for positions and individuals at the University

• The grades represent new grades and do not line up with the old UR structure 14

Grade Minimum Midpoint Maximum

12 $105,570 $150,440 $195,31011 $91,180 $125,370 $159,56010 $77,270 $106,240 $135,2209 $65,480 $90,040 $114,5908 $57,590 $76,300 $95,0207 $48,800 $64,660 $80,5206 $41,360 $54,800 $68,2405 $35,050 $46,440 $57,8304 $29,700 $39,360 $49,0103 $26,158 $33,352 $40,546

2 $22,550 $28,752 $34,953

1 $20,800 $24,786 $30,132

The New Compensation Policies

Compensation policies address a variety of situations.

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Help Ensure Fair, Competitive and Equitable Administration of Pay

· Paying within the grade

· Starting salaries

· Annual salary increases

· FLSA

· Maintaining the program

New compensation policies will be found on the URHR website.

Reward Performance and Support Career Growth

· Promotion

· Transfers

· Temporary assignments/ interim appointments

Management of Pay within the New Structure

An individual’s grade, skills, experience, and performance determine the actual salary for the position.

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+ =

+ =

Grade RecommendedBase Salary

Location inGrade

Position Role, Responsibilities, and Skill Requirements

Knowledge, Skills, Experience, and

PerformancePay Opportunity

Implementation of Compensation Program

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Moving to the New Structure

• This is an entirely new program– As part of the implementation, no one will get a pay decrease– There is no direct relationship between current grades and new

grades

• Employee Impact– Employees whose pay is currently aligned with the market will not

receive a market adjustment (increase to base pay)– Employees whose pay is not currently aligned with the market will

receive a market adjustment (increase to base pay)• Once the grade for the position was established, an employee’s

pay was determined by experience in current role at UR, influenced by performance data and internal equity.

– Employees will continue to be eligible for annual merit increases as part of the compensation program

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Implementation Details

Implementation• New Compensation Program Letters: Distributed May, 2012• Contents include:

– New salary grade– Market adjustments (if applicable)– Title changes (if applicable)

• Managers will distribute the market adjustment letters. Following the distribution of the letters, UR encourages managers to have one-on-one meetings with employees to review the contents and discuss any questions.

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Merit Increase Details

Annual Merit Increases• Annual merit increase process follows normal timeline• Merit increase (if applicable) will be effective after any applicable

market adjustments are applied • Merit increase letters: Distributed June, 2012• Salary effective July 1, 2012 will include merit increase and market

adjustment (if applicable)• Managers will distribute increase letters to employees

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Timeline for Distribution of Market Adjustment and Salary Letters

May 24th • Salary Spreadsheets

due back to HR

May 24th• Performance

feedback due to HR

June 8th• Confirmation

Salary Spreadsheets sent to VP’s

May 11th• Market Adjustment letters

distributed to VP’s

July 1st• Market adjustment

and merit increase effective

April 1 May 1 June 1 July 1

May 4th• Salary Spreadsheets

sent to VP’s—salaries will include any market adjustments

June 26th • Salary letters

distributed to VP’s

April 2nd – 6th Manager Training

April 9th – 13th Make-up Manager Training

April 23rd-May 11th Employee Informational Sessions by Department

May 14th – 18th Make-up Employee Training

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Career Structure and Policies

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Introduction of the Career Structure

• The career structure explains how employees move through career stages• The career structure is comprised of:

– Career Stages: Major steps in an employee’s career. – Career Levels: Groupings of similar salary grades for each career stage– Career Criteria: Skills and competencies that differentiate the career stages

and levels.• The goal of the career structure is to provide employees with a roadmap for

developing their skills and competencies in order to progress to a job in the next career stage or level

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When completed, career information will be available on the URHR website.

Highlights of the New Program

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Highlights of the New Program

Items to remember about the new program include: • A new comparison market group, more reflective of where UR

competes for talent • There is no comparison to the old compensation structure• There was a significant amount of involvement from UR

leadership in the development of the new program• Approximately 350 jobs were benchmarked in the process:– This accounts for 50% of UR jobs and 65% of UR

employees– This a significant amount of coverage and strong

representation of our employees

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Highlights of the New Program continued

Items to remember about the new program include: • Implementation of the structure ensures everyone is paid

competitively relative to our newly defined market:– 49% of employees are getting a market adjustment to

bring them in line with the market– Those not getting an adjustment, have pay that is already

in line with the market • Implementation of the new structure is the result of a

commitment by the University and Board of Trustees to help ensure fair and competitive pay for all UR employees

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The new program will help ensure we are competitive in pay now and in the future.

Frequently Asked Questions

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Frequently Asked Questions Q. How many salary grades are there?

A. There are twelve broad salary ranges. This information will be available on URHR website in May.

Q. How was I assigned to my new grade? What considerations were taken into account?A. Information related to positions, not individuals, was obtained through

current position descriptions. Information about position content, position requirements and scope of accountability was compared to the same position information from several surveys sources. The results of this process were approved by Vice-Presidents and their direct reports.

Q. I do not think that I was assigned to the right grade. What can I do?A. Every effort was made to objectively obtain relevant market data for

University positions and to match University positions to the survey positions. Benchmark positions were placed in a grade based on market value and internal relationships, while non-benchmark positions were placed in a grade by internal relationships. The grade placement of positions was validated by Vice-Presidents and their direct reports. All grade level determinations are final. If you have any questions, please speak with your manager for clarification.

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Frequently Asked Questions continued

Q. How can I find out what grade my position is and if I will receive an increase? A. All employees will be notified of their grade and market adjustment (if

applicable) in a letter that they will receive from their managers in May. Your department head or manager will also be able to advise you of the salary grade and adjustment (if applicable) or you may contact the Human Resources Office for this information.

Q. How were market adjustment decisions made for 2012?A. Once the grade for the position was established, an employee’s pay was

determined by experience in current role at UR, influenced by performance data and internal equity. Vice-Presidents approved the implementation pay for each employee.

Q. How was the number of years in position determined?A. Years in position was based on the date you were hired into your current position.

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Frequently Asked Questions continued

Q. Was previous experience outside of UR accounted for in this study? If not, why not?

A. In order to apply a consistent methodology for all employees, we could not look at prior experience outside of UR. Therefore, only time within a role at UR was used to determine the employee’s pay in the new structure. However, previous experience should have been taken into account when determining starting salaries as individuals joined the University.

Q. If I receive a market adjustment does that mean I have been underpaid? Will I receive any retroactive pay?

A. If an employee receives a market adjustment, it is because their pay is not currently aligned with the market. We are using a new comparison market and salary structure which means pay will be aligned with the new market and structure effective July 1st. This does not mean that pay wasn’t aligned properly in prior years. Retroactive pay will not be given.

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Frequently Asked Questions continued

Q. How can I progress to a higher grade or how can I increase my salary?A. Employees continue to be encouraged to apply for promotional opportunities

when they occur. Qualifying for a position in a higher salary grade, which provides for a significantly broader role will generally be recognized by a salary increase. Annual performance increases also allow employees to increase their salary while remaining in their current grade.

Q. Will titles change as part of this study?A. Titles for most positions will not change. Titles for a small group of

administrative support positions will change based on a review of position descriptions. We may consider further consolidation of titles at a later date.

Q. Will all employee position descriptions, grades and titles be online in July?A. Information on position requirements, grades and titles will be available in the

future. This will enable employees to know what is required of a position in order to prepare themselves if they are interested in applying for the position.

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Frequently Asked Questions continued

Q. Who from the University was part of the development of this program?A. The Presidents Cabinet, an Executive Committee, VP’s Direct Reports, Steering

Committee and HR Project Team. Please see website for further details on participants of each group.

Q. Will survey information, including data and the matches, for UR positions be shared with incumbents?

A. No, the survey matches and data are confidential. The survey data was used, and will continue to be used appropriately by URHR to determine market level pay for our employees.

Q. How often will the market levels be reviewed?A. Human Resources will conduct regular market reviews and make adjustments to

salary grade ranges as necessary.

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Frequently Asked Questions continued

Q. Which individuals are excluded from the new compensation structure?A. Any employee whose pay level is determined by the Board of Trustees (such as

Vice-Presidents, Academic Deans and select coaches) and Spider Management are not included in the new compensation structure. Additionally, faculty are not included in the compensation structure, faculty pay is covered under a different program.

Q. Is it possible to be promoted in the same grade?A. No, a promotion occurs when an employee moves to a position in a higher

grade. Movement to a new position in the same grade is considered a transfer even if the responsibilities are somewhat greater.

Q. How do I get from the minimum of a grade to the salary midpoint?A. Receiving merit increases is the primary way to advance pay within a grade.

Based on UR’s performance management process, high performers should receive higher merit increases than average or low performers. The overall merit budget will impact the amount of funds available for merit increases.

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Frequently Asked Questions continued

Q. If I am paid above the maximum of a grade, will my salary be capped?A. No, a cap on salary maximums will not be enforced, as decided on by UR’s

Cabinet. The job will stay in the grade and not move up to a higher grade. However, effective compensation practice is to use the grade ranges to manage pay. Individuals paid above the maximum are typically those with many years at the institution.

Q. My position description was not up to date when the study was done, how can I ensure my grade is correct?

A. Position descriptions were used as a starting point to determine market matches and grade assignments. However, URHR had multiple discussions with Vice-Presidents, their direct reports and managers to ensure that if the contents of the position description were not up to date, the additional or different roles and responsibilities were taken into account when matching to the market or assigning to a grade.

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Upcoming HR Initiatives

• Implementation of a new talent management system to support all aspects of development including performance management and the new career structure

• Finalization of the new career structure to determine how and when it will be used to inform employee development

• Revision of the Position Description template

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Any Additional Questions?

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