Summary of Key Points
The current job classification and compensation system for non-organized professional and scientific personnel is over thirty years old. While it has served the campus well during this time, much has changed since it was established in the way work is performed and in the market for labor, as it impacts the recruitment and retention of staff. The system was last modified in 1985, when the comparable worth provision was amended into Iowa law. The current system is primarily focused on internal equity between like job classifications, with little consideration of external market factors. Market factors have historically been addressed through advanced starting rates, counter offers to retain individuals with competing job offers, and extended ranges for certain classifications when necessary for retention. The number of these “exceptions” has expanded in recent years as salary market competition has intensified.
The Iowa Promise articulates the University goal to recruit and retain a high quality staff to support the strategic goals and overall mission of the University. A 2005 review of the Compensation and Classification unit highlighted a number of concerns regarding the current system from the perspective of University employers and their difficulties with recruiting and retaining staff in a market competitive environment. Furthermore, concerns have been expressed through the University Staff Council about the compensation system from the employee perspective, including concerns about market competitiveness, progression within the salary ranges, and the overlap of the merit system into the mid and lower level professional pay ranges. The culmination of these concerns lead to the initiative to hire an external consultant to conduct an analysis of our current system and make recommendations for improvement.
The consultant report echoes the case for change articulated in the campus concerns outlined above. It speaks to the changing nature of the University to be more market competitive overall: examples including market competition for students, employees, funding, patients, housing options, etc. These market forces may be different in both direction and intensity at any given point in time for different units of the University, requiring more flexibility and responsiveness on the part of the University to meet the unit goals and needs. Similarly, the compensation system needs to be more flexible and responsive in order to meet the strategic goals of individual units and the University as a whole. As reflected in the Iowa Promise, the goal of the compensation system is to support the recruitment and retention of staff members with the talent necessary to achieve strategic goals.
The consultant report also makes a case for change related to two specific elements of our current job classification system. The first is to change the current point factor job evaluation system used to assign job classifications to paygrades. The current system is outdated, overly complex (with 36 factors), and not well understood by campus constituents. It has not been updated in over thirty years, and does not reflect changes in technology during this time. Nor does the current point factor system emphasize the skills that are important in how work is performed today, such as the growing use of interdisciplinary work teams, expanded uses of technology, emphases on process, customers, and innovation skills, or simply the ability to include other emerging skills that may become important for future success. The report suggests that an effective classification tool can be much simpler and may only require the evaluation of 5-7 distinct factors for each job. The consultants believe that such a system can continue to be effective in recognizing the comparable worth of male and female dominated jobs.
The second change is in regard to the use of broadly defined job classification titles. The report notes that 25% of the professional and scientific staff are currently in one of five “generic” job classifications, such as Project Assistant, Program Assistant, and Program Associates I and II. The difficulties arising from the use of these broad classifications include difficulties in recruitment of qualified staff, the maintenance of internal equity, and the inability to determine market competitiveness with like positions outside the University. It also creates an ambiguity in regard to career identity and progression. The report recommends a more job specific approach to job classification based upon skill, effort and responsibility.
The consultants observed that the current system does not appear to be broken, but certainly can be improved upon. They found it unusual to have a system that was so specifically focused on internal equity, with little relationship or “calibration” to market factors.
They recognize the University’s interest and obligation to act consistent with the comparable worth provision of Iowa law, but noted that the market responsiveness and maintenance of comparable worth are not mutually exclusive. They believe that numerous models exist to demonstrate that each can be achieved and co-exist within a compensation system. The fundamental change they propose in the current system is to base the system on market competitiveness and then make adjustments where appropriate to recognize the comparable worth between jobs held predominantly by women and jobs held predominantly by men. This would be in contrast to the current practice of focusing on internal equity and addressing market by exception.
The consultant report also found that the history of salary increases for University professional and scientific staff has been very competitive with other peer institutions in the Big Ten over the past five years, and that average salaries overall are at or slightly above the average of the peer institutions, particularly if factoring in geographic cost differences with other Big Ten communities. Therefore, our issues with compensation are not about the amount of money budgeted for salaries, but rather, how salary increase money is allocated for individual increases.
Regarding the perception that professional and scientific staff do not move within the salary ranges, the consultants observed that average University salaries approximate the midpoints of the ranges at most levels, indicating that some movement within the range does occur. They indicate that the perception of inadequate movement within the range may be relative to the merit staff whose average salaries approach the range maximums. This may also reflect a lack of understanding of the salary range structure in the professional system, and the lack of relationship that has existed between salary ranges and the market value of pay for individual jobs.
In their summary, the consultants proposed more use of job-specific job classifications based upon skill, effort and responsibility. They also propose a simplified tool for ranking of job classifications into role based levels. These levels would be broad groups of jobs with common skills, competencies and accountability requirements, useful for both communication and career development.
Salary ranges would be calibrated to reflect the most relevant markets for the jobs within each pay level. All employees within that pay level would be paid within the given salary range, thereby promoting internal equity. Within the salary range, market zones would be established to allow University employers to recognize the various markets for compensation (Big Ten peer group, healthcare, research, etc) for jobs within that pay level. Departments would continue to have the latitude to also recognize and reward individual job performance.
To address the concern regarding the overlap of merit pay ranges in the salary ranges of professional and scientific staff, the consultants suggest that the level of pay in the merit system should be considered a relevant market factor in establishing the market level of compensation for related positions in the professional and scientific system. Some overlap is typically appropriate and treating this as one of the market factors to be considered would allow the University to better balance these pay relationships.
The impact individuals would see from these changes would be greater clarity about the market value of their specific position, with a progression toward that market value if currently below market. Employees would continue to have an opportunity to be recognized for their level of performance within a range of market value. These recommendations would not result in the reduction of any current employee’s salary, but could enhance or limit the rate of future increases based upon the existing relationship of a current salary to the relevant market, the individual’s level of job performance, within the context of the monies available for salary increases.
Because the consultants found that the overall level of funding for salaries was comparable to our peer institutions, it is believed that moving toward these recommendations would be budget neutral. Salary increase funding would need to be maintained to continue to reflect changes in market values, within the University’s overall capacity to pay.
The consultants envisioned a two to three year process to move from the current system of classification and compensation, to a model more in line with their recommendations. Specific steps are outlined in a road map for change contained in this report, if the consultant recommendations are adopted. The consultant recommendations include illustrations of how their recommendations could be implemented, however, no decisions about adopting or rejecting the consultant recommendations, in whole or in part, have been made at this time.
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