Revising the Staff Salary Increase Program: Background

Categories: Compensation, Staffing

This is the first of three posts aimed at explaining the new salary increase program that the College will put in place during the next two years. Although we are holding open meetings this week to explain the new procedures, I thought it would be useful to put the relevant information online, so people can review the plan and ask questions (you can use the comments section to do that).

There is a lot of information to share about this plan, and the logistics involved are complicated. Therefore, I have divided this overview into three parts. My first post addresses the history behind the plan; the second will describe the plan; and the third will lay out the timeline for implementing the plan.

Again, if you have questions or just want to weigh in, you may use the comments section. Or, if you prefer, you may email questions to me at vpadmin@middlebury.edu.

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In the spring of 2010 President Liebowitz asked the Staffing Resources Committee to review the College’s staff compensation program to ensure that we optimize the funds allocated to this very significant budget item. (A similar project is focused on faculty wages). The SRC began the project by reviewing the 2008 findings of the last Wage and Salary Committee and met with Human Resources to understand how the compensation program has been working since its inception. The committee then recommended to the President that the W&S Committee be re-commissioned to advise the SRC on the new project.

The SRC concluded that while the staff compensation program is working well, there are several areas that could be improved. These areas, which the W&S Committee flagged for future consideration in its 2008 review, include 1) the challenge of rewarding strong performance through compensation (merit pay); 2) the fact that a considerable number of staff salaries are below the midpoints of their salary ranges, while others exceed the maximum pay level established for their grades; and 3) the lack of career ladders for staff members interested in professional advancement.

Given the President’s charge, the SRC chose to focus on items 1 and 2. Although the committee agreed that the career ladder issue warrants further consideration, it felt that the challenges surrounding the College’s annual salary increase process—namely, merit pay and salary distribution (salaries below the midpoint and at the maximum)—demand immediate attention. After consulting with the reconstituted W&S Committee, the SRC developed several possible strategies for addressing these challenges. Following considerable debate and discussion, the two groups settled on the approach outlined below. It should be noted that this approach is not meant to overhaul the current staff compensation system. Rather, it is an attempt to fine-tune one aspect of the program: the annual increase process.

For years, the College has been committed to a compensation structure that moves employees toward a salary that compares favorably with market rates–namely, the top 20% of the market. This goal dates back to the establishment of the old benchmark system, which was aimed at bringing staff to the 80th percentile of the given market for their job. At the same time, the College has instituted an evaluation process that is designed to reward superior performance with enhanced compensation. In surveys taken in 2007-2008, staff members expressed a strong preference for merit-based pay.

Like most salary programs, ours is based on a careful delineation of job responsibilities and market rates. Several years ago, the College instituted a system that placed each staff position in a particular band and level, establishing a mid-range and maximum salaries for all positions that are tied to comparable jobs in the market. Not surprisingly, given the years of experience represented on our staff, some colleagues earn salaries that exceed the maximum level established for their band and level. And because our method for determining annual salaries is tied to percentage increases, staff members at the top of their salary ranges draw a disproportionate number of dollars from the pool set aside each year for raises.

The SRC believes this arrangement is unsustainable and that in order to reward the good work of staff members who are further down in the general salary range, we need to rethink our approach to salary increases.

The situation we face is a sensitive one. While we want to recognize the superior performance of all employees, including those at the top of the salary range, we also need to support the compensation needs of staff members at the beginning and middle of their careers.  The solution we pursue will require a delicate balance of priorities and a clear understanding of the trade-offs involved.

Read more about the staff salary increase program.

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