Compensation Consistency

While the University of San Diego has for many years maintained a salary structure and position classification process for nonexempt staff, we had never developed a parallel structure for our administrative compensation program. The process we undertook at USD to create and implement an administrative compensation system in conjunction with our overall HR strategic plan is outlined in this article. This same broad approach can be applied at other institutions no matter what type of comprehensive compensation redesign is sought.

Gregory Pogue

With the full support of our president and vice presidents, we began by hiring a compensation consultant to bring credibility and objectivity to the process and to allow HR staff to assume various roles as needed—at times as resource, catalyst, and advocate for members of our campus community. Our first task was to review our compensation philosophy to ensure that it accurately served as a blueprint for developing an appropriate salary structure. The other major pre-project task for our consultant was to review the FSLA or exempt classification of more than 400 administrative positions. Where there were concerns about the validity of an exempt classification, we conducted interviews with the supervisor to discuss the position in detail.

This review took several months and resulted in reclassifying several exempt administrative positions as nonexempt staff positions. Because we included supervisors in these decisions, we experienced little resistance when implementing the changes. We also held one-on-one meetings with each affected employee and his or her supervisor to ensure that all understood the reasons for the change and effects on employment.

To ensure that employees whose status had changed were not penalized, we created an interim "nonexempt administrator" classification that grandfathered in these individuals as administrators for employment-related purposes, including benefit levels, performance evaluations, and annual pay increases. The only difference was that they would now be paid as nonexempt employees, submitting time cards and becoming eligible for overtime pay.

Setting Goals and Ground Rules

In July 2006, once we felt comfortable that our exempt positions were correctly classified, we introduced the project to the campus community through our five divisional vice presidents. Our primary goals were to:

• Create a salary structure based on market data to provide the foundation for applying consistent strategies in hiring and retaining qualified employees.
• Ensure positions are valued in relation to other positions, therefore improving internal equity.
• Develop and implement a process for classifying new and/or revised administrative positions.
• Obtain and maintain buy-in and support for the project among campus stakeholders, along with developing effective communication and educational components.

During this introduction phase of the project, we also reviewed background information about job evaluation and classification with our president and vice presidents. We considered two methods of evaluation for determining the relative value or size of jobs.

1. Factor comparison, based on an analysis of the degree to which various defined elements or factors are present in the form of demands made on the job holder. 
2. Whole job slotting, based on comparing whole jobs with one another or against some form of scale such as job ranking or job benchmarking.

We identified the latter as the most efficient and cost-effective method. Whole job slotting is also the most flexible for system maintenance in terms of ease of classification of new or updated positions.

Steps Toward a New Salary System

Working in concert with our compensation consultant, we developed USD's new administrative compensation structure following these seven steps. 

1. Identify nearly 100 benchmark positions and conduct a market analysis using salary data from major national and local surveys. Surveys included the CUPA-HR National Survey, CUPA-HR Survey of USD Peer Institutions, AICCU Survey (Association of Independent California Colleges and Universities), CompData Survey, San Diego Comprehensive Salary Survey, West Coast Conference Athletic Survey, and AALL National Survey (American Association of Law Libraries). To reduce consulting expenses, USD staff completed the market analysis and our consultant reviewed the results for accuracy and reasonableness. We completed this step in approximately four weeks.

2. Develop a draft exempt-salary structure consisting of seven pay grades, each including a minimum, midpoint, and maximum. These pay ranges are designed to accommodate the university's wide range of exempt positions, grouping positions into broad job families. The midpoint of each salary range is based on the 50th percentile of the market data. The spread (minimum to maximum) is 60-80 percent and midpoint to midpoint is 25-35 percent, with the higher pay grades kept broader for maximum flexibility.

3. Review and analyze the job descriptions of approximately 430 exempt positions, slotting positions into proposed salary ranges. Once the benchmark positions were slotted based on market data, our remaining administrative positions were evaluated against the benchmark jobs. In our job evaluation review we looked at the whole job, including job requirements and qualifications, reporting structure, and internal as well as external job worth. This portion of the project involved HR staff meeting with our consultant approximately two times per week for about six weeks to review and slot all positions.

4. Identify positions to exclude from the administrative salary structure. Through discussions with our president and vice presidents during the introduction phase of this project, we determined that it would not be appropriate to include all administrative positions in an administrative salary structure. For example, we recognized that academic personnel who take on administrative assignments but retain faculty/tenure status should not be included, as their salaries continue to be determined through the established faculty process. This group includes deans, associate deans, associate provost, and some of USD's librarians who have faculty status.

Other key management positions were excluded where salaries for these positions tend to be highly market driven and are individually negotiated. In addition, several within this group of executives assisted HR with validation of the classifications. Their input was very useful to us because they did not have a personal vested interest in the outcome. Finally, athletic coaches were excluded from the salary structure review, due to their unique and extremely varied position requirements and highly market-driven salaries.

5. Obtain feedback on the preliminary structure and classification of positions in each division. By November 2006—five months into the project—we had a draft salary structure. We provided each vice president with a listing of the titles and proposed pay grades for exempt positions in their division only, asking each to review and validate these listings and identify any questions or concerns they had about the preliminary job groupings. We pointed out that, in a broad structure such as this, there are a wide range of positions in each grade, and all positions in a particular grade are not exactly equal but are generally in a similar job family. We also noted that due to a wide variation in job titles, including many cases of title inflation, we did not group positions by title. One goal for our administrative salary structure is that over time it will assist the university in developing better title consistency.

In some cases several of the vice presidents were able to clarify relationships between positions to improve the accuracy and fairness of the classifications. In one instance, a vice president shared plans for a major divisional reorganization. This allowed us to lay the groundwork for future reclassifications of positions to meet the division's changing needs.

Actual revision of assigned pay grades due to input from the vice presidents resulted in fewer than a dozen changes. Limited salary adjustments were required as a result of the project. In all cases where salaries were below the minimum for the proposed pay grade, the divisional vice president agreed that the position was underpaid, and these salaries were addressed as part of the annual increase process. For a few positions for which current salaries were above the maximum for the proposed pay grade, each was discussed with the appropriate vice president. In all cases there were reasons for the high salaries and the decision was made not to redline employees at or above the range maximum but to allow them to remain eligible for annual increases.

6. Develop a process for classifying future positions. While the vice presidents were reviewing the proposed pay grades and classifications, HR staff worked on developing a standard process for classifying new and/or revised positions into the new salary structure. In the past, when departments needed to add a new administrative position, they would develop a job description; determine the salary and obtain budget approval from the appropriate vide president; and submit the requisition, job description, and salary budget to HR for recruitment. Furthermore, individual departments determined titles and salaries based on limited comparisons to other positions within their department or school and with little or no consideration of similar positions elsewhere on campus or of broader market salary data. In addition, positions often were not formally evaluated to ensure that they met the requirements to be classified as exempt under state and federal wage and hour regulations. In some cases, the department's budgeted salary was inadequate to attract the caliber of candidate desired, and additional funding was required before a job offer could be made.

Needless to say, the lack of a centralized process to monitor development of new positions could potentially lead to inconsistencies in job descriptions and job titles, as well as internal and external inequities in salaries. Our new process is as follows:

• The department develops a job description and submits it to our HR compensation unit for classification in the salary structure. This may include a recommendation from the department regarding the proposed salary range for the new position.
• The compensation unit works with the department to finalize the job description, evaluates the position for exemption status, reviews available market salary data, classifies the position into the salary structure, and recommends a proposed hiring salary range to the department.
• The department submits the job description and proposed hiring salary range to the appropriate vice president for approval. In the case of budget requests for new positions, the lead time is often more than one year, requiring careful planning by departments.
• The department submits the approved requisition, job description, and hiring salary range to our HR employment unit for recruitment.

An administrative position-review committee—consisting of members of the HR management team with experience in job analysis and evaluation—is responsible for classification. The committee meets as needed, up to two times per month. New positions are compared to the original benchmark positions and to other positions already classified and assigned to the grade providing the closest match to the job. Comparison factors include scope and complexity; interpersonal focus and customer orientation; communication; leadership responsibility; education, knowledge, and skills; financial responsibility; and job worth.

7. Submit the full structure for cabinet overview. In March 2007 we provided the president's cabinet, specifically the president and each divisional vice president, with copies of the full salary structure for their review, including titles and pay grades for all administrative positions, though not salary information. Overall, there was a high level of acceptance at the cabinet level, and minimal changes were made based on their recommendations. At the request of our budget and treasury division, we agreed to move the implementation date for the new structure to July 1, 2007, to coincide with the beginning of the new fiscal year. Actual budgetary implications were minimal, with only a handful of positions requiring immediate salary increases to bring them to their pay-grade minimums.

Selling the New Structure to Employees

We developed a variety of communication materials to introduce the administrative compensation program to the full campus community. Additionally, each administrator was provided with individual written notification of his/her position's pay-grade classification. Pay-grade information for each position was uploaded to the HR Web site. Employees could view their personal pay-grade information online as well as the pay-grade information for any administrative employees they supervised.

For the first time in USD's history, we now have a formal process for developing and valuing administrative positions. While we still have issues of title inconsistency, and while we need to further improve the quality of some of our job descriptions, over time, we are confident that this new process will assist us in identifying and correcting these issues.

Our administrative compensation program also provides the basis for several future projects planned by the university. One such project is to implement an electronic position-control feature that links our finance and HR modules so that we can more accurately track and monitor the status of positions in the budget and that will assist us in planning for additional positions. We also view our new salary structure process as the beginning point to develop more standardized job descriptions, which will then lead to determining standardized skills and competencies that will ultimately allow us to develop relevant career paths for all of our employees.

Janie Carolin is compensation services manager and Gregory Pogue is associate vice president for human resources at the University of San Diego. E-mail: jcarolin@sandiego.edu; gregorypogue@sandiego.edu.