# The Difference Made by Capping the Max: Guest Post by Patrick Norton, Vice President for Finance and Treasurer

As VP for Administration Tim Spears has mentioned on a few occasions, much work needs to be done between now and July 1, 2012 to ensure: (1) that all staff are in their correct band and level and (2) that all the midpoints (or targets) are calculated correctly. We need time to get this work done, and patience is required.

Some staff colleagues have asked whether enforcing maximum salaries will actually make a difference in the additional amount available to the pool for increases for all staff. I have reviewed the data, and the answer is yes.

If, for the sake of this planning exercise, we assume that the number of staff members who are currently at the max (118) is reduced by 50% as a result of re-pricing jobs and expanding some of the salary ranges, we would still be able to set aside a significant amount of money by enforcing maximum salaries. Below I have itemized the additional resources as a percentage of the overall increase pool, and I have extended this list over the next five years–beginning in 2013, the first fiscal year of the implementation of the new increase process.

• 2013: 0.00% (obviously, no additional money will be available as the amount of the single sum payment to those over the maximum will equal the money saved as a result of enforcing salary maximums)
• 2014: 0.23%, or \$115,000
• 2015: 0.45%, or \$230,000
• 2016: 0.67%, or \$350,000
• 2017: 0.88%, or \$475,000

Now this is simply a model–the actual proof will be seen after we complete our review of the band and levels, as well as the midpoints (or targets)–but I expect the results to be pretty similar to the percentages and amounts listed above. Significantly, these additional resources would be used to augment the pool for annual salary increases.

# More Thoughts About Maxes, Midpoints, Bands, and Levels

A number of people commenting on the salary increase plan have expressed concerns or asked questions about the plan to cap maximum salaries and calculate percentage increases on the midpoint of the salary range. I appreciate all this feedback, and want to emphasize the importance of the review that Human Resources will be conducting during the next year to make sure 1) that our salary ranges, bands/levels are accurately tied to the market; 2) that staff positions are placed in the correct band/level. We have undergone a lot of change over two years, and some staff members have seen their jobs change quite a bit as the overall size of the staff has been reduced.

We did not talk in much detail in the open meetings about what this review will look like, but we will certainly be looking at the possibility of expanding the salary ranges, which would shift the minimum, midpoint, and maximum salaries upward. We will pay special attention to the maximum salaries at the bottom end of our wage structure.  It is unlikely that staff members in the lower salary ranges will see their wages capped.

Finally, I want to stress that these changes will not go into effect until July 1, 2012, so we have a full year to make sure we get the details right.

# A Note on College Finances and the Pool for Staff Salary Increases: Guest Post by Patrick Norton, Vice President for Finance and Treasurer

Given the questions raised about the College’s financial situation in my recent posts on the staff salary increase program, Patrick Norton provided the following commentary on what the pool for staff raises might look like.

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While the financial markets have recovered somewhat, the college is still \$300 million short of what it planned to have at this time in the form of one of its major funding sources: the endowment.  The reduction in endowment value, caused by the large drop in the value of the endowment in 2008 and 2009, translates into a shortfall of \$15 million in annual funding to the operating budget. We addressed the loss of \$15 million in annual funding through a combination of efforts—mainly through voluntary staffing reductions and cost controls in several areas—but we continue to face increased pressure on fundraising, financial aid, and various other expenses. The financial environment for higher education is much different now than it was before the recession.

With all that said, as part of the annual 2012 budget process, we are currently planning for a 3% staff pool increase, which would be 2 times the change in the consumer price index for the 12 months ending December 31, 2010 (1.5%). The change in the consumer price index is a basic measure of the increase in the cost of living.  We will have a clearer sense of what the salary increase pool will be later this spring, once the 2012 budget is finalized.

# Revising the Staff Salary Increase Program: Implementation

The College will implement the staff salary increase program in two phases over the next 18 months.

First Phase

This year, all employees who consistently meet expectations or significantly exceed expectations will receive the bi-level percentage increase. However, the percentage increase will be calculated on individual salaries instead of the midpoint. (We will implement increases calculated on the midpoint in the second phase, described below).   During the first phase, we will also begin giving bonuses to employees who do exemplary work.

Second Phase

During 2011-2012, Human Resources will do extensive market research to review bands, levels, and salary midpoints. At the end of this review, a third party will verify the results to ensure we are on target.

Successful completion of the review will allow us to move in to the second phase. By July 2012, the bi-level percentage increases will be calculated on the midpoint of the salary range. We will also cap salaries at the maximum. Employees at the top of the salary range will be eligible for annual increases; however, these increases will be distributed as single sum payments (at the beginning of the fiscal year), and will not be incorporated in the base salary. One-time bonuses for exemplary work will continue.

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.

# Revising the Staff Salary Increase Program: The Plan

Between June and December of 2010, the SRC and the Wage & Salary committee met regularly to consider how best to administer the funds available each year for staff raises. Our discussions focused on 1) finding a way of moving more staff members toward the midpoint or target of their salary ranges and 2) establishing a fair and effective method of rewarding strong work performance (merit pay).

The first objective grows out of the College’s stated goal of paying staff in the top 20% of the market for their jobs. Years ago, this goal was expressed through the benchmark system, which explicitly linked the growth of salaries to the 80th percentile in the market. In 2006, the College modified its compensation structures by grouping similar positions in bands and levels, each one with its own salary range. The ranges were constructed around midpoints, which Human Resources derived from a market analysis of the jobs included in the band/level. In these analyses, HR identified the 80th percentile salaries for the jobs in the band/level, added the salaries together, and then averaged them to determine the midpoint of the range. Then they dipped down 20 to 25% to set the minimum salary and ratcheted up 20 to 25% to set the maximum.

The midpoints are meant to serve as targets. Though they do not correlate precisely with the 80th percentile salary that a given job would command in the market (local, regional, or national). Rather, they represent the salary that an accomplished employee should expect to make at mid career.

When the SRC and Wage & Salary reviewed the spectrum of staff salaries, it discovered that 808 employees were at or below the midpoint of their salary ranges; 366 were between the midpoint and the maximum; and 118 were at the maximum. (Note that these 1292 employees also include part-time workers). In order to move more employees in the lower half of the salary range toward the midpoint, the committee realized that it would need to find a way of redistributing the funds going to the top of range. For instance, while we identify maximum salaries in our ranges, we do not enforce those maximums. Because annual raises are structured as percentage increases on individual salaries, staff at the top of the ranges receive a significant portion of the dollars available in the pool for raises.

To address this situation, the SRC and Wage & Salary proposed the following changes, which President Liebowitz has approved.

• Annual  increases will be calculated on the midpoint salary, meaning that all staff members in the same band/level will receive the same raise in terms of dollars.  This shift will enable staff to make greater progress toward the target the College has established for staff (that is, salaries in the top 20%) of the market. This change will also slow the growth of salaries for staff between the midpoint and the maximum.
• Maximum salaries will be capped. Employees at the top of the salary range will be eligible for annual increases; however, these increases will be distributed as single sum payments (at the beginning of the fiscal year) and will not be incorporated in the base salary. It is important to note that single sum payments will count toward the College’s retirement plan.  Two caveats are worth stressing here. One is that maximum salaries are at or near the 100% of the market for a given position. The other is that HR conducts regular reviews of salary ranges, and when the market for a particular job evolves upward, HR will adjust the ranges (the minimum, midpoint, and maximum) accordingly.

With regard to merit pay, committee also recommended that salary increases be given in three levels:

• A percentage increase will be given to staff who “consistently meet expectations” (we expect that 75% of the staff would fall into this category).
• A higher percentage increase will be given to staff who “significantly exceed expectations” (approximately 25% of the staff).
• A bonus will be given to 5% of the staff for exemplary work. These employees would also receive the higher percentage increase for significantly exceeding expectations. Bonuses will be awarded through a nomination process that the Vice Presidents will oversee. Bonuses will not be incorporated in base salaries.
• All percentage increases will be calculated on the midpoint.

The percentage breakdowns that will guide our annual increase program–75% who consistently meet expectations, and 25% who significantly exceed expectations–are not arbitrary. Rather, they are based on the data available from years of performance evaluations.

In following up on President Liebowitz’s charge, the SRC and Wage & Salary committee worked to develop a plan that balances several institutional priorities and seems fair. We also understand that the success of this plan will depend on an effective evaluation system and salary ranges that are accurately tied to the market. To make sure we get both of these items right, we have decided to roll this compensation plan out in two phases. You can read about the implementation process in my next post.

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.

# Revising the Staff Salary Increase Program: Background

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.

# The Juice Bar Lives! (Or Will Soon)

Good things come to those who wait . . . . That’s the underlying message of our Juice Bar competition, and I am sure the people looking to buy food and drink in the space once known as the Juice Bar hope this mantra applies to them as well.

So here is the update: as I reported on December 10, our selection committee reviewed nine strong applications, and then interviewed three of the finalists.   We have now settled on our winners, and are very excited about the vision and menus they will bring to the erstwhile Juice Bar (whether it gets a new name remains to be seen).   What’s interesting about their proposal is that it prominently features food options that the Grille does not currently offer (some might call these options healthy alternatives).  In fact, almost all of the proposals stressed the need for healthy/nutritious/local food options on campus.  Which isn’t to say that the Grille doesn’t offer healthy alternatives–only that we could easily expand the possibilities in this area.

So what does this new vision of the Juice Bar look like, and who won the competition?!   You will have to wait until tomorrow (that is, Thursday the 20th) for the answer because I promised the CAMPUS that they could break the news.

Update: you can read the CAMPUS article here, which nicely covers all the salient points.

Also, on behalf of our selection commitee, I want to thank all the students who sent us such creative Juice Bar proposals.  Kudos to the students who will be launching their venture this spring:  David Dolifka, Kate Strangfeld, Ben Blackshear, Jessi Stevens, and Sarah King.

# Juice Bar Competition Update

A selection committee convened last week to review the nine proposals we received for a student-managed food and drink service in the Juice Bar. As we have mentioned before, proposals were evaluated on the following criteria: feasibility, economic viability, vision, and simplicity. We also took into consideration the numerous comments readers left on the last update post, so thank you to all who contributed.

After much deliberation, we have narrowed the field to three proposals. We have notified the students and we will be conducting interviews in the first week of January. We hope to make a final decision shortly thereafter. If we are unable to reach a decision after the interviews, we will reconsider the other applications.

In the meanwhile, please feel free to continue chiming in on what you’d like to see at the Juice Bar.

# On Staffing, Mission, and the Challenges of Reorganization

To illuminate one aspect of the staffing changes the College has experienced during the last two years, we asked Jeff Cason, Dean of International Programs and a faculty member in the Political Science department, to describe the benefits and challenges of reorganization.

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As everyone knows, we have been going through a great deal of change on campus lately as we have dealt with a reduction in staff, changing expectations about what staff should do, and reassessing what we all do, in many ways.

I have found it particularly interesting—as well as challenging and rewarding—to work with staff in the “international” area as we have dealt with the need to readjust our expectations over the last year and a half, and as we have consolidated operations in the area. In this international area, we’ve seen a staff reduction that mirrors the overall staff reduction at Middlebury, which is about 15%. This has not been easy—how could it be?

In the consolidation, we have brought together staff in the International Programs and Off-Campus Study office, the International Students and Scholar Services office, and the Rohatyn Center for International Affairs. Bringing these three areas together makes a great deal of sense, given their affinities and related and cross-cutting purposes.

The consolidation has brought both challenges and opportunities. Since we are an area of the college that has certain “non-discretionary” service requirements (we can’t stop providing services for international students who need visas to come to Middlebury, after all!), we have to figure out how to do things more efficiently, and figure out what we have done in the past that we no longer need to do.  And in some ways we are doing more.  For instance, over the last few years we have been increasing the number of students from other colleges and universities who attend Middlebury’s Schools.  This makes both financial and reputational sense for the College, so we know we will continue in this direction.

A key component of our reorganization effort has been to make sure that communication happens throughout our area and the entire organization.  We have done this by making sure that everyone is at the same table every two weeks, in a general staff meeting. While this might be seen by some as a new time commitment, by bringing colleagues together, we have been able to learn from one another and save time in other ways. At these meetings we have also increased cross-campus dialogue by inviting colleagues from other departments (most recently, the office of Student Financial Services) to meet with our full staff and discuss topics related to the entire group’s work. The individual units also continue to have their standard meetings to discuss nitty-gritty and routine work in their areas. This is still a work in progress, but we have made progress.

Very importantly, this consolidation has led to colleagues doing new things, which almost everyone has found beneficial. As one colleague put it to me in an email, responding to a query about what I might include in this post: “I think the thing most worth mentioning is how the consolidation has forced us to think differently about ‘our jobs.’ We have people who have traditionally always done certain tasks/projects, but as we consolidate, different people have been given the opportunity to dabble in areas of interest where they may not have had experience before.” Noting that there are different needs (and different crunch times) in the different offices, this staff member concluded: “The challenge is identifying these needs and availabilities and matching them with staff interests enough in advance to capitalize on the opportunities, but we’ll get better at that.”

I do think we’re getting better at that, as our staff knows more about what everyone in the broader area—and outside the area—does. It is not a simple process, of course. And it’s interesting, to say the least.

# Closing the Loop

To shed some light on the ins and outs of internal communication, I asked the directors of two of the biggest operations on campus to explain how their departments manage the communication process.  This is what they had to say.

From Norm Cushman, Director of Facilities Services

At Facilities Services, the pursuit of exemplary customer service is a continual goal. With many details to keep track of in our business, there is always the chance that we will fail or disappoint a customer.  Over time, we’ve come to subscribe to the philosophy that if you take care of the little things, the big things will take care of themselves.  Consequently, we believe that taking care of the little things is what matters most.  And in order to take care of the little things, we try to “close the communication loop” in our interactions with others.  Simply stated, if I know something that you don’t know, the communication loop is open.  For email, a response of “thanks,” “I agree,” “let’s discuss,” or “understood” lets the other party know that you have read their message and that they have been acknowledged. Similarly, returning phone messages lets the caller know that you take their call seriously. Closing the loop requires little effort and even when the news does not satisfy the other party, it helps avoid the “they never get back to me,” black-hole of communication.  People almost always wish to know that their message has been received and understood, even if they don’t like the reply.  By the way, this philosophy applies to communications within Facilities Services as well communications with the rest of the campus.

From Mike Roy, Dean of Library and Information Services

People frequently contact LIS when something is wrong, something is broken, or they need something quickly in order to get their work done. And because many of our services require coordination among the various parts of LIS, we often need to communicate internally before we can respond with a complete answer and follow up on a request.  This communication loop can be a challenge to manage. We receive requests through multiple channels—email, web forms, phone calls, faxes, walk-ins, paper forms—and we respond in variety of ways.  We strive to blend the friendliness of a hotel concierge and the efficiency of FedEX.com, and avoid the soulless bureaucracy of governmental agencies.  Over the years, we’ve found that the use of queues (like sending email to helpdesk@middlebury.edu) and allowing patrons to track their requests via the web is the most robust way to manage requests, with the caveat that the best forum for handling a more complicated request is a face-to-face meeting, a phone call, or a series of email.  But the problem with email is that it is fragile. It is usually a one-on-one transaction, and if the thread gets lost, or the person on the other end happens to be on vacation, your request can be forgotten or delayed. More robust systems that allow requests to be routed, managed by multiple people, and allow the requester to check on the status of things are, in principle, far superior to email. That said, such systems are more cumbersome for all involved, and feel much less personal than the phone, face-to-face conversation, and even email.