ACADEMIC AND ADMINISTRATIVE STAFF COMPENSATION REVIEW

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ACADEMIC AND ADMINISTRATIVE STAFF

COMPENSATION REVIEW

Final Program Recommendations

February, 2013

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

_{Executive Summary—Objectives, Findings}

and Recommendations

 Program Recommendations—Faculty

 Program Recommendations—Staff

 Roadmap for Prioritizing Recommendations

 Appendix

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Key objectives for the Academic and Staff Administrative Compensation Review are:

 Develop a compensation philosophy that accurately reflects the goals of Texas Woman’s University (TWU) for attracting and retaining qualified faculty and staff

 Evaluate current compensation processes, models, policies, and practices for both faculty and staff against effective market practices and the new compensation philosophy

 Recommend changes to compensation policies and practices for both faculty and staff that align with the desired compensation philosophy and institution goals

 Specifically,

For Faculty

 Salary increases for promotion and tenure

 “All or nothing approach” of elevating faculty to 90% of market within one year

 Methodology for using CUPA-HR salary survey(s)

 Feasibility of faculty salary inequity pool

 Feasibility of one-time stipends to recognize and reward extraordinary accomplishments

For Staff

 Methodology for collection and use of salary surveys

 Role, value, and placement of internal equity in salary survey process

 Alignment between salary structure and career advancement opportunities

Executive Summary

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Executive Summary

Assessment Findings

The assessment identified four key themes, which served as the basis for the program recommendations.

1. There is dissatisfaction and mistrust of the current compensation system among faculty and staff resulting from:

 A limited Compensation Philosophy, focused primarily on competitive position

 Lack of overall understanding of policies, practices, and processes

 Absence of increases in a number of years

2. The current pay philosophy of targeting 90% of market does not align with the Institution’s current talent needs or strategic direction of the University for both faculty and staff

3. On average, TWU is paying competitively against its current definition of market, which is defined as 90% of the market average for both faculty and staff. However, the differences in comparison markets between Faculty and Staff, and the competitive assessment

methodology add to the mistrust and dissatisfaction

4. Current pay policies are fairly rigid and tightly centered around specific market data in order to prevent perceived favoritism and abuse of the system. However,

 Current market data is not robust enough to support this process

 Pay decisions are relatively centralized, contributing to mistrust

 Desire for performance based pay differentiation is blocked by lack of clear performance criteria and ineffective or non-existent performance management processes

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Executive Summary

Program Recommendations

The summary recommendations are based on findings from the assessment and on effective compensation practices in higher education. Specific details for these recommendations are provided in the following sections of this report.

Compensation Philosophy

 Finalize an overarching compensation philosophy for the Institution with variations in

competitiveness, classification, job and compensation structure for both faculty and staff based upon strategic significance and impact to optimize available financial resources

 Prioritize and implement program recommendations beginning with a shared understanding among

University stakeholders about TWU’s compensation philosophy Faculty Compensation Program

 Develop a comparison group of institutions that is relevant for TWU in terms of institution type, size,

and academic program and target pay at the median of this revised market

 Group disciplines paid similarly in the market and develop salary ranges for discipline groups in order

to recognize real differences in the market and manage internal equity

 Progress faculty through the ranges based on merit. Use the salary ranges along with internal equity,

market competitiveness, and performance to inform increases for promotions

 Begin addressing pay inequities in the short-term by conducting regular equity reviews and

establishing an equity pool.

 Design and implement an outstanding contribution rewards program, following the equity

adjustment process and implementation of the Salary Range Program based upon the compensation philosophy

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Executive Summary

continued

Program Recommendations

Staff Compensation Program

 Develop a comparison market that is relevant and specific to different job types at the Institution. Collect market data from a breadth of organizations through published salary surveys

 Develop a salary structure(s) for all staff at TWU with midpoints based on the market median of the revised market data

 Establish guidelines for setting starting salaries within the salary structure in order to provide managers with some flexibility to make pay decisions. Progress staff through the salary grades with merit increases based on performance

 Map University jobs to clear career paths that help staff prepare for growth opportunities and set accurate expectations about career advancement at the University

 Equip managers with the tools to understand the compensation and performance management programs and communicate the programs to their staff

Detailed recommendations for the faculty and staff compensation programs are provided in the following sections of this report.

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Specific Recommendation Details

The following sections for Faculty and Staff include detailed recommendations followed by an integrated implementation roadmap.

 The Faculty and Staff recommendations describe

 Best practice examples

 Specific recommendations and examples for TWU

 A multi-year roadmap for implementation integrates the two sets of recommendations

 While this report focuses on design recommendations, it is important to recognize that even the best compensation program design can fail if implementation does not take into account communications and a change management strategy

 In order to provide context for the recommendations contained in this report, the following pages illustrate how an effective compensation program will support TWU in fulfilling its educational mission and help create a strong employment value proposition for faculty and staff

This report is designed to illustrate what an effective compensation program looks like as well as provide a roadmap for implementing the recommendations.

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Outcomes

The Compensation System

The recommendations in this report focus on career progression, compensation program design, pay mechanisms and program administration The draft compensation philosophy serves as the framework for our recommendations and is provided in the Appendix.

Integrated Compensation System Compensation Strategy Career Progression:

 Classification structure/career level

 Reporting relationships  Job levels/families  Job/work design  Titles Pay Mechanisms  Pay progression

 Pay opportunity linked to level and performance

 Variable or incentive pay

Program Design/ Administration

 Salary levels and ranges

 Control mechanisms

 Link to the market

 Structure movement

 Pay administration

 Job documentation  Evaluation factors

 Internal versus external emphasis

 Evaluation process

 Strategic compensation program to achieve institutional goals  Foundation for all human

resources initiatives  Employee engagement  Open/transparent system Compensation Philosophy:  Vision  Internal/external valuation  Comparison markets  Program model  Link to performance  Communication/ openness  Pay governance

Pay Delivery _StructureSalary Job

Structure

Institutional Strategy

A successful compensation system has several essential program components all of which work together for a holistic approach.

Job Analysis and Evaluation

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The feeling of belonging to TWU and sharing institutional values

Compensation design may emphasize competitiveness, equity, performance, etc., but is only one element

The Employment Value Proposition

Affiliation, Career, Benefits, and Work Content are important intrinsic and extrinsic rewards that should be aligned with Compensation to drive employee attraction, retention, and

engagement.

The satisfaction that comes from the work you do

Long-term opportunities for progression and advancement The value and competitive

advantage of health, retirement, and tuition benefits

Employment Value Proposition Compensation Affiliation Work Content Career Benefits

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 Executive Summary—Objectives, Findings and

Recommendations



_{Program Recommendations—Faculty}

 Program Recommendations—Staff

 Roadmap for Prioritizing Recommendations

 Appendix

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Best Practices in Faculty Compensation

Effective faculty compensation programs include the following best practices, which support market competitiveness and internal equity of faculty pay:

1. Compensation decisions are informed by sound market data that is based on a relevant and repeatable comparison group of institutions and survey sources.

2. Salary ranges are established by grouping disciplines together that are paid similarly in the market in order to maintain internal equity among and within departments, while also

recognizing real market differences.

3. Salary ranges are used to inform starting salaries so that less experienced faculty are not paid above more experienced faculty who are meeting performance expectations.

4. Opportunities to differentiate pay based on performance and contribution are provided, and faculty progress through the salary ranges based on an assessment of performance criteria and performance expectations.

5. Guidelines for promotional increases are established in order to provide some flexibility for individual pay decisions while also equalizing recognition for similar contribution

among faculty.

6. Salary ranges are updated regularly based on trends in the market over multiple years and multiple disciplines.

Specific recommendations and examples of application for TWU are provided on the following pages.

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Summary of Recommendations for Faculty Compensation

Based on our expertise and best practices found in Higher Education, Sibson recommends the following for the faculty compensation program at TWU:

1. Market Assessment

 Develop a new comparison group of institutions similar in type, size, and resources to TWU

 Continue to use CUPA-HR as the primary survey source but supplement with other surveys as needed and as appropriate

 Match TWU faculty to specific CIP codes in the data and vet with Deans in order to get an accurate view of compensation in the market

2. Salary Ranges

 Develop salary ranges by grouping like disciplines together both in terms of similar market data and similar internal relationships at the University (e.g., group disciplines in the same department together)

 Target the midpoint of the range at the market median but set the range minimum at about 90% of market median

 Use the salary ranges to set starting salaries and manage external and internal pay relationships

 Update the ranges based on trends in market data over 1 – 2 years for multiple disciplines in order to reduce market sensitivity of specific discipline codes

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Summary of Recommendations

for Faculty Compensation

continued

3. Pay for Performance

 Progress faculty through the ranges based primarily on merit increases

 Determine increases for promotions/tenure based on relationship to salary range as well as individual factors

 Implement stipends or rewards for outstanding contributions with specific guidelines for eligibility and awards

4. Address Internal Inequity

 After updating the compensation program based on revised peer group, determine extent of pay inequities and conduct regular (bi-annual) equity reviews. Key considerations for equity reviews are discussed on page 21

 Begin addressing pay inequities by establishing and implementing a pay equity pool that addresses compression and other pay equity issues

 Prioritize refining the compensation program and updating market data first and then address equity and implementation of an incentive program

 Sibson recognizes that TWU will not be able to implement all of these recommendations immediately. The roadmap section of this report helps prioritize recommendations and provides interim steps such as distributing an equity pool to move towards market equity over time

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Selection of the Comparison Group

In order to select a comparison group of institutions that is relevant and defensible, Sibson recommends using a filtering process to identify institutions that are similar to the University in type, size, and resources.

ALL NATIONAL HIGHER EDUCATION INSTITUTIONS “TOP OF THE FUNNEL”

Typically, 25 – 35 institutions resulting from the filter

methodology are included in the comparison market group.

1. Select institutions of similar type based on Carnegie classification and public/private status.

Filter 4: Individually Added / Removed Filter 3: Academic Programs Filter 2:

Size (Operating Budget or Student FTE)

Filter 1:

Institution Type (Carnegie Classification, Public/Private)

3. Select institutions with similar academic programs or status such as programs of distinction or institution rank

2. Select institutions with a similar operating budget and/or student populations, as this parameter includes institutions with comparable resources

.

4. If necessary, specific institutions may be added or removed based on specific criteria not identified in the filtering process such as geographic proximity

25 – 35 Comparison Institutions

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Comparison Group Recommendations

Sibson recommends applying the following filters to develop a relevant comparison group for TWU:

1. Institution Type

 Carnegie classification of Doctoral/Research Universities

 Include both public and private institutions since TWU is an independent public university and competes for faculty with both public and private institutions

2. Institution Size

 Operating budget between about $50,000,000 to $250,000,000

 Student FTE about 7,000 to 17,000

3. Academic Programs

 Institutions with similar caliber programs

 Similarly ranked national universities

4. Individually Add/Remove

 Add specific institutions in Texas

An assessment of TWU’s current faculty comparison group of 63 institutions against the institution type and size filters is available in the Appendix.

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Selection of Salary Survey Sources

Survey Source Pro Con Recommendation

CUPA-HR National

Faculty Salary Survey  Provides data by rank and disciplineCan select specific comparison group of institutions

 Clinical and adjunct faculty data not available1  Some institutions do not

participate

 Continue to use CUPA-HR as primary data source for

building/updating salary ranges

Association Surveys  Relevant data for specific disciplines or programs

 Sometimes provide other qualifiers on data (e.g., doctoral vs. non-doctoral)

 Sometime provides clinical, adjunct, or non-tenure track data

 Usually not possible to select specific

comparison institutions

 Creates inconsistent methodology among programs/departments

 Use surveys to validate and/or supplement CUPA-HR for disciplines/programs/schools in which faculty are particularly difficult to match or hire

 Recommend referencing AACN survey for nursing

AAUP  Data available for every institution  Data not shown by

discipline  Use to provide a cross check for market specific data collected

CompData Faculty

Survey • Survey is new but may provide some useful data by faculty rank and department  Data may be used to provide a cross check for other surveys

Custom Surveys  Can include specific, relevant institutions

 Can target specific programs or disciplines

 Requires large amount of resources

 Data not guaranteed

 Not easily repeatable

 Avoid dependence on custom survey unless necessary

1 _{The 2013 CUPA-HR NFSS reports tenure and non-tenure track data separately.}

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Development of Salary Ranges

Assistant Professor Associate Professor Full Professor

 Ranges help manage

market competitiveness along with internal equity

 Pay ranges may vary

by discipline

 Pay within a range is

usually determined by multiple factors such as time in rank and

performance

 Associate Professor and

Full Professor may not have range maximums, as faculty may stay in the rank indefinitely Market Median Maximum Pay for Rank Minimum Pay for Rank Market Median Minimum Pay for Rank Market Median Minimum Pay for Rank Base Salary

EXAMPLE SALARY RANGES BY RANK

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Grouping Disciplines with Similar Market Pay

 Salary factors1_{provided in the CUPA-HR survey can help identify disciplines that are paid similarly in} the market

 Salary factors for TWU’s most frequent faculty disciplines are shown in the table below. The shading

illustrates salary factor differences among disciplines and potential discipline groupings based on the factors

 Groupings should be verified with actual discipline-specific market data for TWU’s newly defined comparison group

Salary Factors1_{from CUPA-HR Faculty Salary Survey}

Discipline Professor Associate Professor Assistant Professor

Business, Management, Marketing, and Related Support Services 1.23 1.33 1.45 Computer and Information Sciences and Support Services 1.11 1.17 1.16 Area, Ethnic, Cultural, Gender and Group Studies 1.06 1.01 0.95 Health Professions and Related Programs 1.05 1.05 1.05 Biological and Biomedical Sciences 1.02 0.97 0.96 Public Administration and Social Service Professions 0.99 0.97 0.94 Social Sciences 0.98 0.97 0.96 Library Science 0.97 0.97 0.90 Physical Sciences 0.97 0.95 0.94 Family and Consumer Sciences/Human Sciences 0.97 0.94 0.95 Foreign Languages, Literatures, and Linguistics 0.93 0.92 0.88 Mathematics and Statistics 0.93 0.92 0.92 Psychology 0.92 0.91 0.91 Philosophy and Religious Studies 0.92 0.90 0.88 Education 0.91 0.92 0.91 Parks, Recreation, Leisure and Fitness Studies 0.89 0.91 0.88 History General 0.89 0.88 0.86 Visual and Performing Arts 0.87 0.87 0.85 English Language and Literature/Letters 0.87 0.86 0.85

1 _{Salary factor is defined in the CUPA-HR survey as the ratio, for a given rank}

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Sample Salary Ranges for Discipline Groups

The table below represents sample salary ranges by discipline groups. Ranges recognize significant differences in market data among some disciplines but promote internal equity by disregarding small differences between specific disciplines.

Arts & Humanities Sciences Health Sciences Nursing Business

Min Mid Max Min Mid Max Min Mid Max Min Mid Max Min Mid Max

Approx. % of Market Median 90% 100% 110% 90% 100% 110% 90% 100% 110% 90% 100% 110% 90% 100% 110% Assistant Professor $47,700 $53,000 $58,300 $58,500 $65,000 $71,500 $54,900 $61,000 $67,100 $58,500 $65,000 $71,500 $85,500 $95,000 $104,500 Associate

Professor $56,700 $63,000 N/A $64,800 $72,000 N/A $66,600 $74,000 N/A $67,500 $75,000 N/A $98,100 $109,000 N/A Professor $78,300 $87,000 N/A $94,500 $105,000 N/A $85,500 $95,000 N/A $90,000 $100,000 N/A $115,200 $128,000 N/A

Discounts can continue to be applied to ranges for clinical or non-tenure track faculty1_.

1 _{Data in the 2013 CUPA-HR faculty survey for tenure vs. non-tenure track faculty will help provide}

guidance on appropriate discounts. Note: These ranges are not meant to represent differentials

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Using Salary Ranges to Set and Manage Pay

 Starting salaries for faculty consider factors such as prior experience, years since terminal degree, and

internal equity. Most will begin near the lower end of the range assuming limited experience elsewhere

 Movement through the range is determined by multiple factors such as expectations for time in rank and

performance (teaching, research, creative activities, scholarship, etc.). Progression typically occurs through annual merit increase opportunities based on these factors

 Market adjustments are made to the range on an annual or bi-annual basis. Individual faculty members

may receive market adjustments for significant market movement in order to maintain relationship with the range but primary vehicle for individual increases is merit

Salary Range

$ $$

Approximate % of Market Median 0.90 – 0.95 0.95 – 1.05 1.05 – >1.10

Assistant Professor

Years in rank represent the relatively limited period of time Assistant Professors are typically in the rank before moving to the Associate level.

Associate Professor

Associate Professors are not required to move to Professor

and may remain in the rank for a longer period of time. 0 – 4 years 4 – 8 years 8+ years

Professor

Full Professors can remain in this rank until retirement. _{0 – 5 years} _{5 – 10 years} _{10+ years}

0 – 3 years 3 – 6 years 6+ years

While Sibson recommends TWU target the market median for the midpoint of the salary range, newer faculty will be paid below the median and more experienced faculty may be paid above.

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Pay for Performance

Guidelines for Promotion/Tenure Increases

 Managing faculty pay through salary ranges instead of specific market data points reduces the false precision associated with the current practice of adjusting faculty salaries to the discipline specific market point at time of promotion

 Instead, Sibson recommends the guidelines below for considering both internal and market relationships when making promotional increase decisions

 As it may take some time to fully implement a new pay system, the flexibility of these

guidelines will enable the institution to begin to correct inequities over time through promotions

Criteria Assessment of Faculty Member

Significance of promotion (i.e., significance of requirements that must be met for promotion review)

Moderate Significant

Performance compared to expectation

Effective Exceptional

Current salary relative to midpoint of range for promotional rank

High Low

Current salary relative to others in rank with similar experience, performance, and general discipline

High Low Modest Increase 3% – 5% Moderate Increase 5% – 8% Significant Increase 8% – 10%

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Pay for Performance

Stipends/Outstanding Contribution Awards

 Most incentive programs for faculty provide rewards for securing grants or contracts,

especially ones that help fund the faculty member’s salary and/or program, which means the bonus is determined by the amount of increased funding brought in by the faculty member

 Effective incentive programs have three main components:

 Clear definition of eligibility for awards including who is eligible and what counts for the reward

 Group of peers and/or academic leadership that reviews and makes determinations about the rewards

 Clear definition of awards mechanisms (i.e. lump sum awards, non-cash incentives such as parking, etc.)

Current pay equity and market competitiveness must be addressed first for any pay for performance program to be effective.

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Pay for Performance

Developing a Faculty Reward Program

Steps for establishing an Outstanding Performance Stipend include:

1. Define desired performance criteria, which might include:

 Teaching

 Scholarship and other creative activities

 Service

 Grants and contracts

 Other

2. Identify reward mechanisms

 Lump sum award amounts

 Non-cash incentives (i.e. lab/office space, parking, etc.)

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Pay for Performance

Draft Guidelines for Reward Program

 Eligibility—All campuses, colleges, and schools will participate in the program. All full-time

tenured and non-tenured faculty will be eligible.

 Academic Leadership Review and Award—The Dean’s Council (including the Provost) will

be responsible for reviewing and calibrating final award of Outstanding Performance Stipends.

 Stipend Selection Criteria/Process—The Outstanding Performance Stipend is a

discretionary award in that Colleges are free to determine the specific criteria and amounts to be used to award outstanding performance stipends to individual faculty. There is no

entitlement to an outstanding performance stipend and Colleges have full discretion in

establishing criteria and stipend dollar amounts within these general guidelines. Stipends may be granted based on any of the following criteria, or other criteria as established at the College level and approved by the Provost:

1. Sustained performance exceeding expectations

2. Participation in a special project or program requiring exceptional effort

3. Contributions to a climate enhancing diversity

4. Contributions in the form of suggestions that improve student learning and engagement

5. Contributions to exceptional research leading to the generation of new knowledge

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Pay for Performance

Guidelines for Reward Program

 Minimum/Maximum—$250 minimum/$2,500 maximum; however, stipends of less than the

minimum may be awarded when necessary to address funding inconsistencies. In no case may stipends of less than $200 be awarded without the approval of the Provost. Stipends will be in the form of a one-time payment

 Communication to Employees—Each College will be responsible for communicating with

faculty regarding the operation of the program within that unit. Individual faculty will be officially advised of receipt of a stipend through a letter sent by the Dean

 Timing—Outstanding Performance Stipends may be awarded on a one-time basis throughout

the defined performance period. Faculty may receive more than one stipend during that time frame, provided that the total amount received does not exceed the $2,500 maximum.

Colleges wishing to have the stipend award process remain for a specific event may select a more limited and specific time frame or date, within the time frame noted above, for selection of recipients and awarding of stipends

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Internal Inequity

Compression/Equity Adjustments

 Compression and equity adjustments to the base salary are intended to alleviate issues that arise when the market for entry salaries is higher than those paid to more experienced faculty. Equity adjustments correct for systematic inequities in compensation that can be shown to be inconsistent with the historical performance of a group of faculty

 Salary adjustments for this purpose should not be awarded in the absence of a pay equity study of salaries for faculty

 A pay equity study should include a review of all faculty based on the following parameters1_:

 Salary

 Gender

 Race

 Highest degree

 Completion date for highest degree

 Years since highest degree at time of hire

 Adjustments should be made effective at the beginning of a new fiscal year (September 1) unless it is a special exception granted by the Provost

 Date of hire

 Current rank

 Date of promotion to current rank

 Contract length

 Discipline

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Internal Inequity

Draft Guidelines for Compression/Equity Adjustments

 Proposals for salary adjustments shall be made to the Provost’s Office in the spring, in advance of the fiscal year in which they would become active

 The Provost must approve all salary adjustments

 Provost Office will establish a pay equity pool in the event that this cannot be funded at the University level, funding must come through savings in the College’s existing budgets

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 Executive Summary—Objectives, Findings and

Recommendations

 Program Recommendations—Faculty



_{Program Recommendations—Staff}

 Roadmap for Prioritizing Recommendations

 Appendix

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Best Practices in Staff Compensation

Effective staff compensation programs are based on a clear compensation philosophy and include the following best practices:

1. Pay positioning is set at a level that enables the institution to compete for staff within an

appropriate comparison market.

2. Market data is collected from a breadth of relevant organizations both inside and outside higher education with whom the institution competes for talent.

3. Regular collection and evaluation of market data follows a repeatable, efficient process that can be aided significantly by the use of a market data tool.

4. Market-based salary structures are used to manage market competitiveness and internal equity of compensation.

5. Pay guidelines associated with the salary structure enable flexibility for determining starting salary and progression through the range based on individual factors including skills,

experience, and performance.

6. Significant differences in cost of labor among geographic locations are reflected in the salary structure or pay practices.

7. Career paths are clearly outlined to provide staff with realistic expectations and understanding of job and development opportunities at the institution.

Examples of these effective practices and recommendations for TWU are provided on the following pages.

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Summary of Recommendations for Staff Compensation

Based on the best practices outlined on the preceding pages, Sibson recommends the following for the staff compensation program at TWU:

1. Market Assessment

 Conduct a market assessment for staff using effective market pricing practices including benchmarking against multiple survey sources that include higher education and general industry data

 Consider purchasing or subscribing to a technology tool that will help manage survey

submissions and organization of data to increase efficiency and ability to work with multiple data sources

2. Salary Structure

 Once market data is collected, validate the current Classified structure to ensure it is

competitive and jobs are assigned to levels appropriately. It is likely that this structure may require some significant adjustments

 Develop a salary structure for Professional & Administrative staff based on the median of the market data. Level any non-benchmark jobs into the structure based on an internal

evaluation1

 Use the new salary structure ranges and guidelines to allow for some more flexibility in setting starting salaries for new hires

 Progress staff through the salary grades based on performance and through merit increases

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Summary of Recommendations for Staff Compensation

continued

3. Career Structure

 Develop job families for staff positions and map career progressions within each job family

 Align the career paths with the salary structure

 Develop career standards and progression criteria for career stages and levels at the University

Sibson recognizes that TWU will not be able to implement all of these recommendations immediately. The roadmap section helps prioritize recommendations and provides

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Effective Market Pricing Practices

Effective market pricing includes the following:

1. Data Sources: Select quality, credible sources that have at least ten organizations reporting data

for any data point that is selected. Job descriptions should contain the core functions of the job in order to understand whether the match selections are appropriate. Data should be organization weighted (not incumbent weighted) and reported in percentiles (not averages).

2. Match Selection: Select matches based on the content of the job, not the title. A match is

appropriate if approximately 75% of the job content and requirements align. More than one match should be used per job (to form a market consensus) if possible and only one match per source. At least 60% of incumbents in a variety of departments and levels should be matched to provide

enough credible data for developing a market-based pay structure(s).

3. Geographic Adjustments: Geographic differentials may be applied to account for differences in

labor market by location. Geographic adjustments are generally based on cost of labor rather than cost of living.

4. Market Competitiveness: Select data at the market percentile that aligns with TWU’s

compensation strategy (e.g., target pay at the 50th _{percentile of the market). This may be different}

for some jobs such as functions for which it is particularly difficult to hire talent or that are critical to the strategy of the University.

5. Benchmark and Non-Benchmark Jobs: Not every job at TWU will have a match in the market. We

call jobs with market matches “benchmark jobs” and jobs without market matches “non-benchmark jobs.” The University should benchmark at least 50-60% of its jobs. Non-benchmark jobs are leveled into the compensation structure based on an internal valuation process that compares the

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Developing Comparison Markets

 An appropriate comparison market includes institutions and/or organizations with whom the University recruits talent from, loses talent to, or competes with for talent

 The organizations with whom TWU competes for talent may not be exactly the same as TWU, but the type of talent they attract may be similar

 The following chart provides an assessment of what factors are important when creating a comparison market by types of roles at the University

Very Important Somewhat Important Not Important

Comparison Market Characteristics

Type of Role

Similar Size and Type

Geographic

Location Higher Education

Senior Administrators Directors, Managers and Professionals Non-Exempt

Recommendations for comparison markets in the draft Compensation Philosophy shown in the Appendix reflect this assessment.

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Survey Sources

Since some staff jobs are specific to higher education (e.g., Financial Aid Counselor), while others are found outside higher education (e.g., Accountant), it is important to use multiple survey sources that reflect all the types of organizations with whom TWU competes for talent.

Publisher Survey Title

CUPA-HR Administrative Compensation Salary Survey

CUPA-HR Mid-level Administrative & Professional Salary Survey

Towers Watson HR Personnel

Towers Watson IT and e-commerce

Towers Watson Middle Management

Towers Watson Office Personnel

Towers Watson Professional Administrative

Towers Watson Professional Specialized

Towers Watson Supervisory Management

Towers Watson Tech and Skilled Trades

Towers Watson Top Management

Mercer Financial Accounting and Legal

Mercer Human Resources

Mercer Information Technology

Metroplex Website Metroplex Compensation Database

Most surveys provide specific industry or geographic cuts of data that can be selected based on the specific comparison market for the type of role.

Higher Ed

General Industry

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Using Multiple Survey Sources

EXAMPLE MARKET CONSENSUS

(Data in $ Thousands)

Survey Base Salary

University

Position Survey Survey Title Weight Adjustment

25th Percentile 50th Percentile 75th Percentile

Programmer Survey 1 Programmer III 1 0.0% $79.5 $88.9 $98.8

Survey 2 Systems Programmer 1 0.0% $57.1 $61.7 $65.4 Survey 3 Programmer 1 0.0% $68.2 $79.0 $85.5 Market Average $68.27 $76.53 $83.23 University Average $70.10 $70.10 $70.10 University as % of Market 103% 92% 84%

Note that any effective market pricing technology tool will house multiple surveys and calculate the consensus automatically.

University job leveled into the salary structure based on the consensus of the 50th _{percentile ($76.53).}

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Geographic Differentials

 Cost of Labor reflects the differences in salaries in a location based on the talent market, while Cost of Living reflects the cost for housing, groceries, etc. in a certain location. The two are

often related but can be quite different

 Geographic differentials are generally applied to market data when the cost of labor in a particular geographic location is significantly higher or lower than the location of the market data

 The table below shows the cost of labor and cost of living in Denton, Dallas, and Houston relative to the national average

 While the cost of living is significantly higher in Dallas and Houston, the cost of labor is not, which suggests a geographic differential does not need to be applied to salaries for jobs in those locations. However, TWU may decide to offer a cost of living differential if it is finding it particularly difficult to hire or retain staff in Dallas and Houston

Location Cost of Labor1 _{Cost of Living}1

Denton, TX 103.2% 99.7%

Dallas, TX 104.2% 113.0%

Houston, TX 104.9% 110.8%

1 _{Cost of labor and cost of living data is sourced from the Economic Research Institute}

Geographic Assessor database and reflects the average of data points at the $30,000, $60,000, $90,000, and $120,000 salary levels. Data is as of January 1, 2013.

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36

The Purpose of a Salary Structure

Effective salary structures:

 Help manage pay within the University by providing compensation guidelines and ranges for pay

 Maintain competitiveness with the external market

 Ensure internal equity among compensation for jobs and individuals at the University

 Allow for flexibility to adjust pay based on the external market for the job, as well as an individual’s skills, experience, and performance

 Simplify, streamline, and reduce the burden of salary maintenance and administration (e.g., job re-evaluation)

 Increase transparency of pay decisions at the University

 Increase understanding of compensation management among directors/managers/supervisors

Sibson strongly recommends TWU develop a salary structure for Professional & Administrative staff in addition to Classified staff. The following pages provide examples of types of salary structures.

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Market-Based Structure Example

Narrow Structure with Narrow Pay Ranges

Characteristics

 30+ grade levels are common

 10% – 15% midpoint to midpoint progressions

 50% salary range spreads

 Compensation managed to midpoint

Band Structure Graphic View Influence of Market on Determining Band Structure

Midpoint Minimum Maximum Above Maximum Below Minimum Design Considerations

 Less flexibility in administration of structure

 Needs to be maintained more frequently due to market changes

 Career growth focused on vertical movement through the structure

Structure Most Effective in Environments with…  Standardized work

 A strong vertical hierarchy

 Unionized or highly structured environments

Maximum 50%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

$

 Career growth occurring through vertical moves

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38 Above Maximum Below

Minimum

Market-Based Structure Example

continued

Broad-banded Structure with Wide Pay Ranges

Characteristics

•

5 – 8 broad bands

•

30% – 50% midpoint to midpoint progressions

•

Salary range spreads from 80% – 100% at lower levels to 100%+ for mid to upper levels

•

Compensation managed within zones or market reference points

Midpoint

Minimum Maximum

Design Considerations

•

More flexibility in administration of structure

•

Structure does not need to be updated as frequently

•

Allows for more differentiation of employees within band

•

Career growth focused on lateral movement through a band, with band-to-band movement possible, but uncommon

Structure Most Effective in Environments with…  Diverse employee segments

 A non-hierarchical organizational structure

1 2 3 4 5 6 7

$

80% – 100%

 A dynamic competitive environment

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Market-Based Structure Example

continued

Blended Structure

Characteristics  15 – 20 grade levels  15% – 30% midpoint progressions  Range spreads of 50% – 75%

 Compensation may be managed to internal control points (zones or reference points), taking into account market pay for each individual job

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

$ _Minimum _Midpoint _Maximum

Above Maximum Below

Minimum

Design Considerations

 A relatively simple structure with less frequent maintenance and reevaluation of grading of jobs required due to flexibility built into the structure

 Allows for increased flexibility in cross-functional job movement

 Allows for balancing pay for both the job and the person, rather than to an inflexible control point

Structure Most Effective in Environments with…

 Some jobs with standardized tasks and activities and others with more diversity of responsibility

 Mixed competitive environments—stable for some jobs and dynamic for others

 A somewhat hierarchical yet complex organization

 An organization that requires some structure but also wants the flexibility to manage compensation from a systematic standpoint

50% – 75%

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40

Alignment of Salary Grades with Job Families and Career Paths

Building a career structure around job families helps set employee expectations about career progression.

14 13 12 11 10 9 8 7 6 5 4 3 2 1 Business Administration/ Finance Academic and Student Services Athletics Campus and

Office Support Chaplain

Development/ Institutional Advancement Facilities/ Operations JOB FAMILIES GRADES

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Developing a Unified Career Structure for the Institution

D C B A Grades 13 12 11 10 9 8 7 6 5 4 3 2 1 CAREER STAGES A1 A2 B1 B2 C1 C2 Career Levels A3 SALARY GRADES B3 D1 D2

Developing career stages and levels that span job families encourage movement both within and among job families at the Institution.

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42

Proposed Career Standards

Career Stage B

Career Level B1 B2 B3

Training/ Education/ Experience

 HS diploma or GED required

 Associates or Bachelor's degree may be required

 Specialized skill training/ certification may be required

 0–2 years of experience in area of responsibility

 Bachelor's degree required

 Generally 2-5 years of experience in area of responsibility

 Bachelor's degree required. Advanced degree may be preferred or required for some job areas

 Generally more than 5 years of experience in area of responsibility

Competencies  Professional Knowledge: Possesses working

level of professional skill and/or knowledge in a specific area

 Dependability: Conscientious, thorough, and

reliable when performing and completing job tasks. Completes work in a timely manner; meets commitments with minimal oversight

 Attention to Detail: Demonstrates responsibility

for, and handles accurately, the details associated with one’s work

 Accountability: Accepts personal responsibility

for outcomes

 Information Seeking: Keeps abreast of current

developments, trends, and competitive offerings in the industry

 Professional Knowledge: Possesses intermediate

level of professional skill and/or knowledge in a specific area

 Accountability: Seeks and accepts personal

responsibility for outcomes. Critiques own performance and learns from mistakes

 Information Seeking: Keeps abreast of current

developments, trends, and competitive offerings in the industry. Identifies information that is needed and where to find it

 Innovation: Provides creative / novel ideas to

improve the organization

 Influence: Employs facts and data to establish

viewpoint and influence decision makers

 Professional Knowledge: Possesses advanced level of

professional skill and/or knowledge in a specific area. Serves as expert and resource to others

 Information Seeking: Keeps abreast of current developments,

trends, and competitive offerings in the industry. Strives to know more about subject matter and its impact on the institution’s goals

 Innovation: Provides creative / novel ideas to improve the

organization. Establishes well–reasoned steps for implementing the ideas

 Influence: Persuades, influences or gains the support of others

based on skills, knowledge, and personal credibility. Influences others to take action

 Planning: Prioritizes and organizes actions, resources, and other

people to achieve targeted objectives. Sets timelines for completing projects effectively and efficiently

Organizational/ Technical Skills

 Utilizes working knowledge of tools (e.g., computers, software applications or databases, mechanical equipment) to complete job function effectively

 Operates tools under standard situations and performs basic maintenance

 Utilizes intermediate knowledge of tools (e.g., computers, software applications or databases, mechanical equipment) to complete job function effectively

 Operates tools under some non–standard situations, may repair some tool malfunctions, and acts as resource to train others in use of tools

 Utilizes basic financial and accounting knowledge to develop or track budgets or expenses

 Utilizes advanced knowledge of tools used by the function (e.g., computers, software applications or databases, mechanical equipment) to increase effectiveness or efficiency of work.

 Develops or improves upon tools to increase effectiveness or efficiency of work

 Utilizes basic financial and accounting knowledge to develop or track budgets or expenses

Salary Grades 4 – 5 6 – 7 8 – 10

Representative

Titles _ Admission Counselor_{Associate Graphic Designer}

 Safety Specialist

 Financial Aid Advisor

 Librarian

 Internal Auditor

 Web Designer/Developer

 Environment/Health/Safety Specialist

 Project Engineer

 Senior Web Programmer

 Major Gifts Officer

 Staff Psychologist

Relevant

Training _ Advanced computer/software_{Introduction to budgets/financials}

 Certification courses in area of specialty

 Advanced computer/software

 Project management

 Certification courses in area of specialty

 Intermediate accounting/budgets/financials

 Advanced project management

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Developing a Salary Structure with Market Data

 TWU’s draft compensation philosophy states that the compensation program will balance

external market competitiveness while providing for flexibility dependent on the value of jobs to the organizational model of the University

 External market data provides the foundation for constructing a salary structure as shown below

 Benchmark jobs are assigned to the salary grade with the grade midpoint that is closest to the market median for the job

Benchmark market medians are a typical reference point for building salary ranges in a market-based structure

ILLUSTRATIVE GRADE

Midpoint

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44

Leveling Non-Benchmark Jobs

Benchmark jobs are assigned to salary grades primarily based on their market value.

Assigning non-benchmark jobs to the salary structure involves a comparison to benchmark jobs within the same job family or to jobs within the University that have similar skill

requirements and job scope.

Typically, jobs are compared internally by considering:

 Knowledge and Skills: The formal/informal expertise needed to perform the duties of the job on a day-to-day basis

Example: Accounting rules, standards, and procedures

 Impact: The impact that a job has on key organizational imperatives

Example: Financial health, academic quality, or effectiveness of services provided within the

Institution

 Scope of Responsibility: The breadth or range of the job’s operational influence within the Institution

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Managing Pay for the Job and the Individual

 The salary structure and grade ensure that the compensation range for a job is competitive with the market

 The individual’s skills, experience, and performance determine the actual salary for the position within the grade

Salary Grade Recommended

Base Salary Position in Grade

+

=

Job Role, Responsibilities, and Skill Requirements Knowledge, Skills, Experience, and Performance Pay Opportunity

+

=

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46

Setting Pay within a Grade

 Once a market-based salary structure is developed, the following guidelines can be used for setting starting salaries for new hires by evaluating where they are on the continuum

 Many institutions set a policy that new employees can only be hired in Quartile 1 or Quartile 2 of the salary grade

 Expert in all job criteria

 Has broad and deep knowledge of own area as well as related areas

 Depth and breadth of experience in the job at TWU, specialized skills and significant value

 Serves as expert resource and/or role model/mentor to others in similar jobs or to other areas

 Performs all aspects of job effectively and independently

 Experienced in the job and possesses required knowledge and skills

 Consistently exhibits desired competencies to perform job successfully

 Seasoned and proficient at building job responsibilities

 Performs some/most job responsibilities with increasing effectiveness

 Possesses all/most of the basic knowledge and skill requirements, but may need to build upon them through experience

 May still be learning some aspects of job or developing expertise to handle them more independently and effectively

 Consistently exhibits many or most desired competencies to perform job successfully

 New to job and field, has little or no direct, related prior experience

 On steep learning curve, building both skills and knowledge as well as ability to handle job responsibilities

1st Quartile

Minimum

2nd Quartile 3rd Quartile 4th Quartile

¼ Mark Midpoint ¾ Mark Maximum

SALARY GRADE RANGE

Once an employee’s starting salary is set, they progress through the range based on performance through merit increases.

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 Executive Summary—Objectives, Findings and

Recommendations

 Program Recommendations—Faculty

 Program Recommendations—Staff



_{Roadmap for Prioritizing}

Recommendations

 Appendix

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48

Prioritization of Recommendations

Sibson recommends the following priorities from program recommendations for faculty and staff:

Faculty Staff

1. Refine and confirm the draft compensation philosophy including target pay positioning 2. Develop the comparison group of

institutions and conduct a market

assessment using CUPA-HR data from the new comparison group

3. Develop ranges for faculty and begin using the ranges to manage faculty pay and promotions

4. Identify gaps between current pay and minimum or expected placement in range based on years in rank

5. Set funds aside as available for an equity pool to close the gaps and begin applying available funds to those paid farthest below market

6. Confirm guidelines and process for administering outstanding contribution awards

1. Refine and confirm the draft compensation philosophy including target pay positioning 2. Refine comparison market definitions, secure

survey sources, and conduct market assessment

3. Use market data to evaluate Classified salary structure and develop Professional &

Administrative salary structure

4. Assign benchmark and non-benchmark jobs to structure(s) and identify gaps between current pay of staff and structure ranges

5. Set funds aside as available to close the gaps and begin applying available funds to those paid farthest below market

6. Develop job families and map career progression within job families at TWU

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2013 2014

Activity Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-Mar Apr-Jun SepJul- Oct-Dec

University-wide

1. Present Executive Summary for discussion with President Stuart

• Gain support for Faculty pay equity analysis as a priority over design and

implementation of the “University Contribution Awards Program (UCAP)”

It is recommended that TWU complete the selection of a more appropriate peer group, a new competitive analysis and the development of salary ranges , so that revised data serve as a foundation for the Pay Equity Analysis.

• Discuss implications and timing of TWU’s visioning and strategic planning process

for informing the Compensation Philosophy

2. Prepare cost estimates of initial recommendations (see step 3 for faculty on page 51 and

1-2 for staff on page 53) and identify funding sources

3. Confirm decisions about recommendations and timeline for near-term and strategic actions. Refine and finalize the Compensation Philosophy

4. Communicate, through Open Sessions and President’s message, the results of the study and the strategic roadmap for implementing the approved recommendations

5. Gain support for purchasing technology tool and survey sources for conducting staff market assessment

6. Confirm the strategy with detailed project plan, responsibilities, and resource requirements

Transition Timeline assumptions

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50

Draft Implementation Roadmap

Recommended but Aggressive Timeline

March – April,

2013 2013May, June,2013 July – September,2013 October – December,2013 January – March, 2014

Sample detailed task timeline provided on the following pages.

 University-wide  Faculty  Staff Conduct competitive assessment based on new competitive framework and positioning Develop performance management process to support pay for performance and train

managers Confirm decisions on

recommendations, compensation philosophy, and timeline

Communicate strategy and program implementation roadmap Develop salary structure(s) including leveling non-benchmark

jobs and link to job family progression Conduct competitive assessment based on new competitive framework and positioning

Develop salary ranges, hiring pay practices,

and pay guidelines

Develop pay for performance outstanding contribution rewards program Provide equity increases

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2013 2014

Activity Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-Mar Apr-Jun SepJul- Oct-Dec

Faculty

1. Develop comparison group of institutions

2. Conduct market assessment with 2013 CUPA-HR data

3. Identify any gaps between current salaries and market data to provide budgeting estimates for possible increases

4. Develop equity pool based on budget estimates 5. Develop market-based salary ranges

6. Develop policies and guidelines for managing compensation through salary ranges 7. Begin using salary ranges to manage compensation of faculty

8. Perform gap analysis between current salaries and expected placement in ranges based on years in rank

9. Use gap analysis to determine individual salary adjustments 10. Salary adjustments are reflected in paychecks

11. Continue to use salary ranges and policies to manage compensation

12. Collect 2014 market data and determine if any adjustments to ranges are needed 13. Perform gap analysis between expected placement in range and actual salary. Set aside

part of budget for merit increase and part for equity increases 14. Determine strategy for distributing funds

15. Salary increases are reflected in paychecks

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52

Sample 2013 – 2014 Timeline

continued

2013 2014

Activity Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-Mar Apr-Jun SepJul- Oct-Dec

Staff

1. Explore market pricing tool technology options and select vendor 2. Develop comparison market and secure survey sources 3. Conduct market assessment with survey data

4. Evaluate salary structure against market data and develop new salary structure(s) 5. Level benchmark jobs into structure

6. Level non-benchmark jobs into structure

7. Identify gaps between current salaries and salary grade minimums for increase budget estimates

8. Develop strategy for closing gaps over time. Consider continuing to provide merit while reserving part of funds for equity increases

9. Identify job families

10. Identify career paths within job families 11. Develop career standards for career levels

12. Train managers on new compensation and career programs including performance management processes and feedback delivery

13. Determine individual salary increases

14. Salary increases are reflected in paychecks. Individual decisions communicated by managers to employees

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 Executive Summary—Objectives, Findings and

Recommendations

 Program Recommendations—Faculty

 Program Recommendations—Staff

 Roadmap for Prioritizing Recommendations



_Appendix

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54

Proposed Compensation Philosophy Overview

Sibson supports an overarching compensation philosophy based on the Institution’s values and strategic goals but recognizes that variations in classification and compensation structure can and should occur to reflect real differences between faculty and staff positions.

The role of pay and benefits in supporting and aligning with TWU’s Mission and Strategic Plan.

The degree to which the compensation philosophy, systems, and processes will be openly communicated.

The balance between internal value in the job evaluation process and external parity in comparison to the market.

The comparison markets against which TWU will benchmark pay. The degree to which multiple markets are needed, and the competitive pay position relative to those markets.

The types of pay delivery vehicles that are best aligned with TWU’s rewards strategy and the scope of the program components.

The degree to which pay is linked to performance and the method for determining levels of performance.

Clearly defined roles, responsibilities, and decision rights for the design, approval, and management of pay programs.

Vision

Link to Performance

Internal vs. External Valuation

Program Model Pay Governance Communication/Openness Comparison Markets Core Elements Va riable Elements A single philosophy can cover both faculty and staff Potential for variability

The compensation philosophy on the following pages will be further refined based on the discussion today.

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TWU Draft Compensation Philosophy

Compensation

Philosophy

Element Proposed TWU Principles

Vision  Texas Woman's University is an institution of higher education dedicated to the pursuit of educational, research, and public service objectives

 The University seeks to attract and retain the best talent to accomplish the mission of the

University while also recognizing its mission of accessible education which requires a financially conservative use of available budgets

Internal vs.

External Valuation

 TWU’s compensation program will balance external market competitiveness while providing for flexibility dependent on the value of jobs to the organizational model of the University

 The program will use competitive market data to develop salary structures and pay ranges for faculty and staff

– Faculty ranges will be based on market data for both rank and discipline

– Staff benchmark jobs will be assigned to pay ranges using external market data

– Staff non-benchmark jobs will be assigned to salary ranges relative to benchmark jobs using job factors, which might include the following: required knowledge, skills and experience, scope of responsibilities, and job impact

 Base salary competitiveness will be maintained through:

– The identification of key benchmark jobs and positions that will be used to monitor the market

– The monitoring of the market on a regular basis to ensure continued competitiveness

– A periodic review of the salary structure and pay ranges with adjustments made as necessary and as financially feasible to maintain the desired level of market competitiveness in direct pay

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56

Compensation Philosophy

Comparison Markets

 The University has a diverse workforce that competes with multiple markets for talent. External benchmarks are pulled from the appropriate market for each role and level

 TWU will target pay at the median of the market for the appropriate comparison market for each employee segment. However, overall pay practice will be managed within financial constraints, thereby requiring that qualifications, experience, performance, and contribution above the norm are required for pay to meet or exceed midpoint

 TWU comparison markets will include the following:

TWU Draft Compensation Philosophy

continued

Employee Segment Industry Geography

Faculty Higher Education: Similar National Institutions National

Staff—Senior Administrators

Higher Education: Similar National Institutions General Industry: National Private and Public Employers

National Staff—Directors,

Managers and Professionals

Higher Education: Similar Regional Institutions General Industry: Regional Private and Public Employers

Regional/State

Staff— Non-Exempt

Higher Education: Similar Local Institutions General Industry: Local Private and Public Employers

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TWU Draft Compensation Philosophy

continued

Compensation Philosophy

Program Model Pay Components

 Pay is part of the total rewards strategy at TWU

 Base Salary will be the primary monetary method of rewarding individuals

– Base salary will reflect a balance between the value of the position in the market and the value of the position to the University

 A Recognition Program with meaningful rewards for significant contribution and performance above expectations will be developed to supplement competitive salaries

 The benefits package offered by the University is a key component to the employee value proposition

– Benefits given to employees by TWU include health, retirement, and paid time off Program Scope

 The compensation program will cover all faculty and staff across the University, but specific components will be tailored for each