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University of MissouriFaculty Compensation

October 2, 2009

Betsy RodriguezVice President for Human Resources

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People Excellence Synergy

UM System Human Resources Strategic Plan 2009-2013

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Vision

University of Missouri is recognized as having a positive, inclusive, high performance culture based on cooperation and respect and where the work environment reflects a community that promotes work/life balance, values unique contributions, and allows individuals to make a difference through their service.

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Mission

People First: To provide strategic guidance for the implementation of best practice human resource management that enables UM excellence and values our people as its primary resource.

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Critical Focus Areas

• Fully engaged workforce (people first)

• Effective processes

• Excellent service to customers

• Strategic resourcing

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People First: Talent ManagementHuman Resources

TALENT MANAGEMENT

for Faculty

Workplace Climate Faculty Recruitment Faculty Retention Faculty Engagement

• Climate workshops• COACHE• Diversity• Understanding & improving climate• Work-Life balance

• Diversity• Recruitment - pipeline for future faculty • Recruitment • Search committee training

• Compensation philosophy• Diversity• Phased retirement• Work environment & climate• Collaboration & collegiality•Total rewards system

• COACHE• Diversity• Mentoring• Work-Life balance•Total rewards system

Professional Development

• Dealing with performance issues• Diversity• Leadership development programs• Mentoring• New Faculty Teaching Scholars

General Policies

• Academic titles & appointments• Diversity• Leaves for academic appointments • Non-Tenure Track Faculty• Compensation & total rewards

ACADEMIC HR ISSUES

Academic Affairs

Succession Planning

• Develop model• Exit interviews• Identify leadership competencies• Mentoring• Phased retirement•Recruitment

Performance Management

• COACHE• Academic appointments• Chair training • Diversity• Phased retirement• Tools to address personnel issues

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People First: Total Rewards System

• Total Rewards System is driver of people strategy---making possible a diverse, high quality, engaged, and productive faculty and staff

• Compensation and rewards must align with and be part of university/campus strategic plans

• Total rewards sends a message to (prospective and current) employees

• Effective use of Total Rewards System resources requires philosophy, strategy, planning, analysis, and accountability

• And investment!

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Philosophy/Strategy Question

If we value people first, why do our budgets always begin with mandates such as utilities, maintenance, and insurance? Why isn’t compensation the first ‘mandate’?

Compare people assets to physical assets – we’ve deferred the ‘maintenance’ and that is causing structural problems.

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Additional Questions

• Can faculty and staff explain their salary level, esp in relation to similarly situated colleagues?

• Can faculty and staff explain their career path, and the compensation changes that accompany promotions?

• Can we reward longevity (seniority) and also pay for performance?

• How important is internal equity?• How much value do we get for the cost of benefits?

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Consequences of Below Market Salaries

• Higher turnover, and the associated greater cost of training new faculty and staff

• Longer time to fill positions and the costs of extended vacancies in key positions

• Filling positions with 2nd and even 3rd tier candidates as top-tier candidates accept positions at organizations that provide higher levels of compensation (and the longer-term implications this has for the University's image, ability to draw students both within and out-of-state, impact on development and research funding, etc.)

• Lower morale and associated reduced productivity

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Total Rewards Framework: CompensationBegins with philosophy (to mirror our vision): Examples… To provide total compensation that attracts and retains high

quality faculty and staff, and that rewards (seniority?) high performers.

To be competitive within appropriate occupational peer groups for high performing faculty and staff with programs that focus on recruitment and retention.

To be at the competitive average by campus, with a core set of centers of excellence that are leaders in their fields.

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Total Rewards Framework: Compensation (con’t)

Includes a strategy: e.g., • Where are we now? – see next slide • Where do we want to be? • What needs to be done?• How is it funded?• How much focus on salary and benefits vs

other ‘rewards’?

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Peer Comparisons: Faculty Salaries

• Includes all ranked faculty per AAU definitions

• Chart shows percent growth in overall salary base, with an average salary

• Average salary ranges from $73k to $116.8k

• MU was only one of few schools with increase in 2008

• With strategic investment in Fall 2008, MU remains next to last

1st yr rounded to 100's

Institution - Ranked High to Low on 10-Yr Growth Fall '98 Fall '07 Fall '08

Three Yr Growth

'05 to '08

Five Yr Growth

'03 to '08

Ten Yr Growth

'98 to '08

One Yr Growth

'07 to '08California, University of -- Los Angeles 84,069 118,714 116,800 8.6% 14.4% 38.9% -1.6%California, University of -- Berkeley 89,783 119,751 116,500 7.7% 9.9% 29.8% -2.7%California, University of -- San Diego 83,126 111,034 107,200 7.8% 13.6% 29.0% -3.5%Rutgers, State Univ of New Jersey 78,014 106,960 106,800 11.2% 17.5% 36.9% -0.1%North Carolina, University of -- Chapel Hill 74,106 109,679 106,000 14.8% 21.2% 43.0% -3.4%Virginia, University of 77,454 107,195 103,000 3.6% 13.8% 33.0% -3.9%Michigan, University of -- Ann Arbor 77,762 108,848 102,600 2.3% 9.7% 31.9% -5.7%

California, University of -- Santa Barbara 79,100 107,861 102,300 0.2% 11.1% 29.3% -5.2%Maryland, University of -- College Park 69,819 105,497 102,000 5.1% 13.5% 46.1% -3.3%California, University of -- Irvine 77,174 104,030 101,900 - 16.5% 32.0% -2.0%California, University of -- Davis 76,769 103,742 101,600 11.4% 12.5% 32.3% -2.1%Ohio State University 66,872 95,910 100,500 12.7% 21.4% 50.3% 4.8%Illinois, University of -- Urbana 72,084 98,757 99,700 7.4% 15.7% 38.3% 1.0%Washington, University of 64,785 97,892 96,400 11.1% 20.7% 48.8% -1.5%Texas, University of -- at Austin 70,280 103,563 96,100 1.0% 13.2% 36.7% -7.2%State University of NY at Buffalo 68,625 90,196 94,800 12.1% 17.6% 38.1% 5.1%Iowa, University of 68,357 93,539 94,100 11.5% 20.2% 37.7% 0.6%State University of NY at Stony Brook 69,754 94,824 94,100 4.1% 11.9% 34.9% -0.8%

Wisconsin, University of -- Madison 69,494 93,343 93,400 7.4% 10.2% 34.4% 0.1%Minnesota, University of -- Twin Cities 72,527 98,664 93,400 3.7% 11.8% 28.8% -5.3%Kansas, University of 58,144 86,690 91,400 17.2% 30.2% 57.2% 5.4%

Michigan State University 65,850 91,194 91,000 6.7% 11.5% 38.2% -0.2%Purdue University 66,909 89,505 90,100 6.9% 13.2% 34.7% 0.7%Indiana University -- Bloomington 65,398 91,132 89,300 5.5% 10.3% 36.5% -2.0%Colorado, University of -- Boulder 65,766 94,406 88,300 3.9% 9.8% 34.3% -6.5%

Pennsylvania State University 67,158 99,527 87,500 -4.9% 2.5% 30.3% -12.1%Pittsburgh, University of 64,881 90,206 87,300 2.6% 8.4% 34.6% -3.2%Arizona, University of 65,269 93,315 87,200 2.6% 13.8% 33.6% -6.6%Texas A & M University 64,276 92,420 86,000 -0.7% 9.5% 33.8% -6.9%Nebraska, University of -- Lincoln 61,663 87,231 85,900 5.8% 13.0% 39.3% -1.5%Florida, University of 62,489 85,068 85,300 5.3% 14.0% 36.5% 0.3%Iowa State University 65,655 87,362 85,300 7.5% 13.5% 29.9% -2.4%Missouri, University of -- Columbia 63,864 76,139 81,600 13.3% 18.7% 27.8% 7.2%Oregon, University of 55,352 75,447 73,300 5.3% 12.3% 32.4% -2.8%

Avg Annl Change: -2.0%

Average Salaries for Ranked Faculty at Public AAU InstitutionsAll Ranked Faculty Combined

May 2009 - Using Previous Fall Salary Information

Source: AAUP faculty salary surveys

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Institution - Ranked High to Low on Fall'08 Avg Salary Fall '98 Fall '01 Fall '03 Fall '05 Fall'08 '98 thru '08

North Carolina, University of -- at Chapel Hill 88,700 103,400 106,300 115,300 142,700 60.9%

Michigan, University of -- Ann Arbor 96,700 108,900 117,800 125,600 142,100 46.9%

Virginia, University of 96,500 107,600 112,900 123,100 133,400 38.2%

Texas, University of -- at Austin 84,400 98,800 103,200 115,700 132,300 56.8%

Illinois, University of -- Urbana 86,800 100,900 107,000 116,600 129,600 49.3%

Minnesota, University of -- Twin Cities 85,600 97,600 102,000 110,300 127,400 48.8%

Ohio State University 84,900 93,700 103,500 112,600 126,400 48.9%

Iowa, University of 84,500 97,100 100,800 105,300 124,600 47.5%

Michigan State University 77,500 89,700 98,300 105,900 121,900 57.3%

Colorado, University of -- Boulder 79,500 89,700 98,400 102,800 121,500 52.8%

Indiana University -- Bloomington 80,800 94,200 99,100 104,900 118,400 46.5%

Kansas, University of $69,800 $84,400 $87,900 $98,000 117,300 68.1%

Texas A & M University 76,400 93,400 95,200 104,100 116,300 52.2%

Purdue University 84,600 90,500 97,200 104,000 115,000 35.9%

Iowa State University 80,000 87,400 92,200 97,200 112,100 40.1%

Missouri, University of -- Columbia 78,400 88,900 91,800 96,700 111,200 41.8%

Nebraska, University of -- Lincoln 74,900 86,600 90,900 97,500 110,100 47.0%

Wisconsin, University of -- Madison 77,600 92,900 96,200 100,500 109,500 41.1%

Institutional Average Rates Below UM-Columbia

Surrounding State Institutions

Missouri, University of -- Columbia $88,900 $96,700

Average Salaries for Ranked Faculty at Public AAU InstitutionsFull Professor - Columbia

Salary Peer Comparisons: Faculty

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Institution - Ranked High to Low on Fall'08 Avg Salary Fall '98 Fall '01 Fall '03 Fall '07 Fall'08 '98 thru '08

North Carolina, University of -- at Chapel Hill 65,200 72,200 74,100 90,900 94,100 44.3%

Michigan, University of -- Ann Arbor 68,200 76,300 80,900 89,100 93,100 36.5%

Virginia, University of 65,000 71,200 75,100 91,000 91,700 41.1%

Colorado, University of -- Boulder 57,300 65,400 71,200 84,900 88,900 55.1%

Minnesota, University of -- Twin Cities 61,700 69,200 69,900 84,300 86,200 39.7%

Michigan State University 58,000 67,600 72,400 82,800 85,900 48.1%

Texas, University of -- at Austin 54,600 63,500 64,900 81,300 85,300 56.2%

Wisconsin, University of -- Madison 58,700 70,200 73,300 82,500 84,500 44.0%

Ohio State University 58,100 63,500 69,100 80,500 84,200 44.9%

Illinois, University of -- Urbana 60,600 69,900 72,000 82,200 83,500 37.8%

Iowa, University of 58,000 63,700 67,500 81,000 83,100 43.3%

Iowa State University 60,100 65,400 69,200 77,600 81,900 36.3%

Texas A & M University 54,500 66,300 67,900 79,800 81,800 50.1%

Indiana University -- Bloomington 56,600 64,000 68,500 77,800 81,600 44.2%

Purdue University 57,700 62,700 68,800 77,200 80,200 39.0%

Kansas, University of 50,800 59,600 61,700 76,100 79,600 56.7%

Nebraska, University of -- Lincoln 53,600 62,800 65,400 74,400 76,700 43.1%

Missouri, University of -- Columbia 58,800 63,900 64,500 70,800 75,300 28.1%

Institutional Average Rates Below UM-Columbia

Surrounding State Institutions

Average Salaries for Ranked Faculty at Public AAU InstitutionsAssociate Professor - Columbia

Salary Peer Comparisons: Faculty

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Institution - Ranked High to Low on Fall'08 Avg Salary Fall '98 Fall '01 Fall '03 Fall '07 Fall'08 '98 thru '08

North Carolina, University of -- at Chapel Hill 51,200 60,300 61,800 76,900 82,000 60.2%

Texas, University of -- at Austin 50,600 60,000 62,300 77,600 81,800 61.7%

Michigan, University of -- Ann Arbor 54,500 61,700 66,700 79,300 81,600 49.7%

Illinois, University of -- Urbana 52,300 60,400 64,500 73,700 76,300 45.9%

Colorado, University of -- Boulder 48,200 55,300 61,000 72,300 75,600 56.8%

Minnesota, University of -- Twin Cities 51,300 58,200 60,600 72,300 75,000 46.2%

Ohio State University 48,700 55,200 62,300 70,900 75,000 54.0%

Virginia, University of 51,200 56,800 60,800 74,500 74,700 45.9%

Wisconsin, University of -- Madison 52,100 59,800 63,600 70,400 73,000 40.1%

Iowa, University of 49,300 56,100 59,800 69,600 72,600 47.3%

Purdue University 48,800 55,700 60,500 69,200 72,300 48.2%

Texas A & M University 47,500 56,900 58,900 70,500 72,200 52.0%

Iowa State University 48,000 54,300 57,800 67,600 71,500 49.0%

Indiana University -- Bloomington 45,900 55,300 59,600 68,400 71,100 54.9%

Kansas, University of 44,400 50,900 51,200 65,000 67,100 51.1%

Michigan State University 47,500 53,900 58,900 64,200 66,900 40.8%

Nebraska, University of -- Lincoln 46,000 54,200 56,200 65,100 66,300 44.1%

Missouri, University of -- Columbia 48,500 52,600 52,300 58,200 61,100 26.0%

Institutional Average Rates Below UM-Columbia

Surrounding State Institutions

Missouri, University of -- Columbia $52,600

Average Salaries for Ranked Faculty at Public AAU InstitutionsAssistant Professor - Columbia

Salary Peer Comparisons: Faculty

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Total Rewards Framework: Compensation (con’t)

Is defined by a set of Objectives and/or Core Values:e.g.– for Salary:• Salary ranges will be established based on appropriate markets• Initial compensation will be within the established ranges, based on experience

and skills– with consideration for internal equity• Compensation changes will be based solely/mostly on merit• Merit will be determined by college/campus established metrics• Differentiation and decision making regarding high vs. low performance• Metrics will consider all areas of performance critical to university mission• Salary structure will manage employee growth and development• Faculty promotions will include a flat dollar amount or a % of salary• All employee groups will be treated equally for annual increases (regardless of

market position? Regardless of funding?)

Objectives lead to building and communicating salary STRUCTURE

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Total Rewards Framework (con’t)

Is defined by a set of Objectives and/or Core Values:

e.g.-- for other Compensation:• Compensation programs will be flexible to meet

individual, department, and campus needs• Total Rewards considers issues beyond salary

and benefits– total value proposition

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Total Value Proposition

• What are other reasons/programs beyond traditional compensation (salary and benefits) that attract and retain faculty and staff?

• What do employees value? Faculty: Environment/culture, collegiality, academic freedom, recognition, shared governance, collaboration opportunities, gifted/high performing students, lab space/equipment, professional travel, work/life balance, etc.

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Total Rewards Framework (con’t)

Must be based on Analysis:

Faculty (ranked) data available and communicated • Further work needed on defining salary ranges• Further work needed on unranked faculty data

Staff data needs work!• Consultant did initial work for BOC meeting• Will require significant time and investment

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Total Rewards Framework (con’t)

Concludes with Accountability:• Require annual performance evaluations to justify

annual salary changes• Provide market data to decision makers – see next

slide• Hold decision makers responsible for ensuring

compensation objectives are met, or there is a strategy to get there

• Ensure faculty and staff understand the compensation philosophy, strategy, objectives

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11-Month SalariesTenure and Tenure Track

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Cost of Salary Changes

Cost of salary increases:$638m operating (state) budget

• Each 1% increase = $8 million• 4% salary increase would cost $32 million

How to pay for increases?• Tuition: 1% comp increase = 2% tuition increase• Other:

Increases in revenues Decreases in expenses (e.g. reduction in work force, program

closures, efficiency savings, vacancy savings)Do we allow variation by campus?

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Quick Review of Benefits

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Comparator Institution BenchmarksHewitt Associates Relative Value Study

Employer Paid Value Total Value

Index Rank Index Rank

Retirement 117.9 3rd 77.6 15th

Retirement* 101.1 7th 77.6 15th

Pre Retirement Death-Group Life 107.7 7th 91.2 10th

Long Term Disability 143.9 4th 107.9 8th

Dental 85.3 12th 93.0 12th

Preretirement Health 98.9 10th 102.8 8th

Post Retirement Health-prior to age 65 161.9 3rd 127.5 2nd

Post Retirement Health-age 65 and higher 88.4 8th 103.1 9th

All Post Retirement Health 116.3 8th 110.7 6th

All Benefits (Including Tuition) 106.3 6th 92.3 13th

All Benefits (Including Tuition)* 98.5 11th 92.3 13th

*After 7/1/09 pension plan amendment

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Summary Observations of Benefits

• UM offers a competitive array of benefit programs that are currently slightly below the average of its peer group

• UM, strategically, assumes risk through self-insurance when appropriate

• UM employees, through premiums/contributions bear a significant portion of the cost of providing UM benefit programs

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Summary Observations of Benefits

• UM employees, at the time of purchasing health care services bear a significant portion of cost for services rendered

• Areas of significant deviation from the average of the peer group include:

Above average Employer Paid Value of Long Term Disability Base Plan Employer Paid Value of Post Retirement/Pre 65 Medical Benefits

Below Average Employer Paid Value and Total Value of Dental Benefits

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Summary Observations of Benefits

• The 7/1/09 change that requires employees to contribute to the pension plan has resulted in a decrease in UM’s ranking among peer institutions in both the pension and overall categories

• The majority of peer institutions continue to offer subsidized post employment health care benefits

• UM is unique in offering a defined benefit plan as the primary pension plan avenue

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History of Actual UM Contribution Rates

7/1990

7/1992

7/1994

7/1996

7/1998

7/2000

7/2002

7/2004

7/2006

7/2008

7/2010

7/20120.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%18.00%

Actual UM Contributions

Peer Institution Average

10/1/07 Projections using 8% rate of return

04/09 Projection - Assumes a -15% rate of return for year ending 9/30/09, 0% for year ending 9/30/10 and 8% thereafter

% of payroll