Total Compensation Review
Market analysis is complete, Regents approved adjustments starting FY20
NOVEMBER 2019: On November 22, CHRO Steve Patin sent an update on the market study to all UA employees including answers to frequently asked questions. DOWNLOAD PDF
OCTOBER 2019: On June 4, 2019, University of Alaska (UA) President Jim Johnsen announced that UA Human Resources completed the comprehensive compensation and benefits review study. All of the market salary data for faculty, staff and executives was collected and evaluated using CUPA-HR industry information. Individual letters were sent to all university staff, faculty, and executives with details of the study and employees' specific results in comparison to the higher education market and other relevant labor markets.
At the September 12-13, 2019 UA Board of Regents meeting, the Regents approved the Fiscal Year (FY) 2020 operating budget, which included $3.4M in compensation adjustments related to equity and market. The plan for these adjustments is to bring all university employees that are currently below 90% of the market median up to 90% over the next three years (FY20, FY21, FY22). Since additional funding was not provided by the legislature, the adjustments are to be funded through reallocation at each university.
Compensation Project Update - Message from President Johnsen Oct. 11, 2019
See updated FAQs below for more information.
* Ensuring compensation practices are built on a foundation of consistency, equity and transparency.
* Demonstrating good stewardship of resources so that the university is fiscally responsible and sustainable.
* Supporting our recruitment and retention goals by maintaining market competitiveness with peer institutions and labor markets.
Elements of the review:
* Faculty salaries
* Staff salaries
* Executive (officers and senior administrators) salaries
* In addition, we are reviewing internal pay equity.
All UA employees have received a letter that provides their market salary comparison and findings of the benefits review. The pay equity review is still in progress.
Click HERE for the executive summary. Watch the video and review the FAQs below or visit individual project pages for more information:
ADDITIONAL RESOURCES FOR SUPERVISORS:
Total Compensation Review Webinar for Supervisors DOWNLOAD PDF
Watch a VIDEO with CHRO McGee describing the Total Compensation review process.
Compensation Guiding Principles
- As a mission focused institution, the university’s emphasis as an employer is on recruiting, retaining and developing people who embrace the mission; the compensation system supports the mission and is not a deterrent or distraction to our employees’ contributions to the mission.
- The compensation system will uphold the university’s role in the state as a leading employer. As an employer, the university strives to be:
- Competitive: Offering market-driven salary and benefits programs
- Consistent: Providing a dependable framework for compensating employees in a fair and equitable manner
- Creative: Within the confines of its budget, offering a flexible and inspired suite of benefits to support employee engagement and productivity
- Collaborative: Working with our employees to ensure our compensation and benefit programs meet their needs and interests
An employee value proposition answers the question, "Why would the people we need want to join, do their best work here, and stay?"
Compensation Study FAQs
FAQs November 2019
Why is our objective to achieve only 90% of our comparable market levels? What does that say about how we value our people?
Because we do value our employees, the objective of the adjustment was to bring them up to a competitive salary structure. Our research tells us that a competitive salary structure in higher education is +/- 10% of the market median. By achieving 90% of the market median, we ensure consistency and equity while remaining competitive. It also comes down to what we can afford. It is well documented that we have a $25 million budget shortfall to overcome this year with more in the future.
Given our current budgetary constraints and future challenges, did we plan to lay people off to pay for this adjustment?
Staff reduction was never the intended mechanism to fund the adjustment. Funding the adjustment was a line item in the fiscal year 2020 budget approved by the Board of Regents. After beginning the market study and committing to correct our salary structure, we received word of the substantial cut from the legislature. So, in the end, yes, jobs will be eliminated to fund many of our priorities to include the compensation adjustment.
Given our fiscal challenges, is this a wise thing to do at this time?
Yes. We simply cannot be successful in our mission without maintaining a quality workforce. It is very difficult to maintain a quality workforce without a competitive total compensation package-- the competition for talented professionals is substantial. Unless we act now, our talent will eventually erode and it will be even harder to get caught up.
We have heard there have been errors in some of the individual adjustments. What are the sources of the errors? How frequent are they? What are we doing about them? What should we do if we suspect there has been an error?
There were errors in administering the adjustment. Some errors were the byproduct of data in our databases, some were missteps in planning and execution. In a project of this magnitude, with the complexities stated above, we anticipated there would be errors. Indeed there have been. Even with best practices, an organization our size should expect as much as 20% initial defects. We are currently addressing these errors one by one as we learn of them. If you suspect there is an error, please contact your supervisor and firstname.lastname@example.org or 907-450-8200.
As a supervisor, how do I justify similar salary adjustments for my highest performing employees and others who are not as strong? For long-tenured employees vs. short? For highly qualified and certified vs less so?
The market study considered market placement independent of individual performance and competency. Leaders always have the discretion to submit a merit request such as an in-grade adjustment or bonus to recognize an employee for performance excellence. In consultation with stakeholders, we will be looking at ways to consider these factors in the future.
As a supervisor, why wasn't I provided the salary data first so I could correct mistakes?
In hindsight, more time should have been afforded for leaders and supervisors to review the employee job information and calculations. Also useful would have been a very clear description of how adjustments were calculated so that leaders could easily audit them and corrections could be made before they were delivered to employees.
As a supervisor, wouldn't it have been better to be the one who made the notification of the salary adjustments to my team members?
There is great value in these messages coming directly from a person’s supervisor. Well informed supervisors could have clarified many policy and procedure elements with employees and helped to reduce confusion. Additionally, we might have caught some errors before employees were notified. This is certainly an area to adjust going forward.
I’m close to retirement and will likely be gone before the complete adjustment is made over the next three years. Can I receive the entire salary adjustment if I retire before then? Why can’t I get the whole increase in one year?
We cannot accommodate the whole increase for employees close to retirement. Such a practice would be cost prohibitive and, more importantly, discriminatory treatment based on age.
What salary level do I apply to new employees? Do I place them in the same grade and step as an existing employee in the same position after this market adjustment?
Perhaps, but not necessarily. There are many factors to consider when you hire a new employee such as experience in the particular field, education, etc. Additionally, you would review the peer employees within your department. This requires discretion and judgment by the hiring manager and should always consider the current budget environment. If assistance is needed please contact email@example.com.
My employees are grant funded, what are the guidelines for salary market adjustment for sponsored projects?
Please review these guidelines for sponsored projects. DOWNLOAD PDF
FAQs October 2019
Will this market adjustment affect staff salary steps?
Yes, if you are receiving an adjustment you will be placed on the closest step to your new salary amount.
I don’t have my letter, how do I find my individual market study results?
Position-specific market information from the June letter is available HERE. Use SSO to log-in to access your results. If you are a supervisor, your direct report results are also available. If your position has changed since July 1, new market data will be updated Oct. 28.
How do I know that I am eligible for a compensation adjustment?
All university staff, faculty, and executives received a letter, mailed in June, which provided details of the study and employees' specific results in comparison to the higher education market and other relevant labor markets. University employees that are currently below 90% of the market median will be brought up to 90% over the next three years (FY20, FY21, FY22). Groups that were not included in the current study include temporary employees, adjuncts and Local 6070 employees.
When will I see the compensation increase?
If you are in the same position, a compensation increase equal to 1/3 of the amount required to increase to 90% of the market median will go into effect on October 28, 2019, and be reflected in your November 22 paycheck. By December 20, 2019, you will also receive a lump sum for retroactive payment back to July 1, 2019.
If you are in a different position since July 2, your position will be evaluated on a case-by-case basis. Your current salary will be evaluated to determine if it is at least 90% of the market median. If not, the salary adjustment will be the total amount to reach 90% of the median divided by three, reflecting the three-year implementation. By December 20, 2019, you will receive a lump sum (amount salary increased to 90% of the market divided by three) for retroactive payment of your current position since the date the position was held in FY20.
Is the compensation project complete?
No, the project will be completed in phases. This first phase provided a baseline market compared to the higher education salaries. The next phase will include developing a compensation philosophy and implementing policy and regulation updates to reflect the new compensation philosophy. It may also include guidelines for placement of new hires and considerations for current employees such as length of service, performance, and professional experience.
I changed positions since July 1. I was under market in my previous position, will I receive a lump sum for the time I was in my previous position?
No, but your current position is being evaluated and market adjustments will be applied as appropriate. If you are below 90% of the market median in your current position, you will receive a notification with more information.
I don’t think my position was accurately evaluated. Can I appeal and receive a market adjustment this year?
The data for this initial market study is accurate to the best of our knowledge. If you believe your study result to be in error, talk to your supervisor. Validated concerns will be addressed in the next year’s study, but will not result in a market adjustment this fiscal year.
FAQs June 2019
When will I receive my individual results from the market study?
Represented faculty were mailed letters through the UNAC union office in mid May. Individual letters containing the results of the market study were mailed June 17 to non-represented faculty, staff, and other union members.
FAQs January 2019
Will staff be able to review the specific results of this study as it relates to their position (i.e. you are in the median range, under, above, etc.)?
General Counsel is working with Human Resources to determine what data can be legally shared. Once the review is completed, legally allowable data will be available.
What is the communication plan to let those who are impacted by the equity study know the outcome of the review?
An affected employee-specific communication plan is being developed. Those employees will be contacted as soon as possible, following the initial review stage of the pay equity analysis.
Are department salaries being compared with central office salaries? If so, aren’t there big differences in pay between the two?
Salary schedules are not different for administrative positions in departments or in central offices. Similar staff positions are being evaluated together in the market study.
How is cost-of-living included in the analysis of salary/compensation? Will the results of the cost of labor and cost of living analysis be shared with the UA community?
Both cost of labor and cost of living are being reviewed in the market analysis. Information on the results will be incorporated into the presentation of outcomes.
Alaska has the highest healthcare costs in the nation. Is the cost of healthcare specifically considered in this study?
Yes, a comprehensive benefit analysis was recently completed which included UA's healthcare plan.
How does our compensation compare to other jobs in Alaska? It is unfair to compare my job to a colleague in the lower 48 when their cost of living is 30-40% less than my current location.
The market analysis was conducted for faculty, staff and executives using comparable national education data. However, we continue to review the cost of labor and the cost of living in Alaska to understand our competitiveness within the state as well. The cost of living compares costs associated with living in Alaska. The cost of labor compares peer positions within your location of work in Alaska.
How do I, as an employee, determine what my Standard Occupational Code (SOC) is for my job so that I can compare to national averages published in 2017, by the Bureau of Labor Statistics? How do I know if my SOC is accurate and up to date based on the job position defined in Banner?
In the market analysis, we compared UA positions to similar positions with higher education focused surveys to retrieve the national data. We did not utilize the Bureau of Labor Statistics information. If you would like to know your Standard Occupational Code (SOC), you can contact your regional human resources department.
Can you include how many salaries are used at each MAU and in each faculty category (asst., assoc., full) to calculate averages?
When reviewing the market analysis at least five data points (peer positions within the same CIP code and rank) in a survey were needed to compare salaries. More than five peers were identified for each campus. In the analysis, median, not average, was used.
Where do adjunct professors fit into this scenario? Is the intent to include them in any subsequent salary adjustments?
The compensation structure for adjuncts is very different from other salary structures at UA and thus was not within the scope of this study. However, this does not mean that the UA adjunct salary structure may not be reviewed in the future.
UAA is a research and graduate degree-granting institution with millions in external awards yet it is listed as a 4-year campus. What is the appropriate category for UAA?
UAA and UAS are considered Master's Institutions. UAF is considered a Doctoral Institution.
Will gender be included as a variable? What is UA's current gender gap and will it be assessed again at the end of this exercise?
Gender is included as a variable in the pay equity analysis along with other factors such as age, race, etc. Once the pay equity analysis is completed, a process will be established to identify and negate possible future inequities.
Compensation Study FAQs
Why is this project being done?
Leadership has identified the need to conduct a total compensation analysis and a pay equity review of faculty, staff, and executives for competitiveness, equity and retention.
What is the project timeline?
What are the scope constraints of this portfolio of projects?
All five of the projects within this portfolio are to assess current state and placement within the market, in order to provide a framework in which UA can determine compensation methodology going forward.
Who is involved in this project?
UA Human Resources, with an internal working group of experts and an advisory committee made up of faculty, staff, and executives for communication and input and outside consultants; Lockton, Quatt, and Gallagher. Project Leads: Keli McGee, CHRO, Tara Ferguson, Director of Compensation, and Heather Arana, Compensation Analyst.
How were the participants selected for the advisory and working groups? What are the expectations for the advisory committee members?
Based on recommendations from leadership and HR, the advisory and working groups were chosen to provide guidance from diverse perspectives to the project from a variety of units on campus.
Advisory committee members are expected to disseminate project status information to their constituents, as well as provide feedback on the findings as the project reports are drafted/completed.
Who are Lockton, Quatt, and Gallagher?
Lockton, Quatt and Gallagher are consulting firms hired by University leadership to assist with the UA compensation, benefits and pay equity projects. They are all global providers of human resource solutions and have extensive experience working with higher education institutions.
What is the distinction between salary, compensation, and total compensation?
Base salary and compensation are synonymous terms. Total compensation incorporates both base salary and benefits. This portfolio of projects is assessing total compensation for all benefits-eligible employees.
How do you define market competitiveness?
The competitive salary range is plus or minus 10 percent of the market median
How are market median comparisons determined?
For staff and executives, position descriptions for each classification are reviewed against industry appropriate compensation surveys. They are considered a good match if the descriptors align to at least 70 percent of the market median. For those positions that do not have a market match, they are assessed individually and compared to internal positions with similar duties and responsibility.
For faculty, industry Classification of Instructional Programs (CIP) for each discipline are compared to national faculty compensation surveys.
Each review utilizes system-wide peers, as well as each university’s individual peers.
How were peers identified for each campus?
The objective in developing each peer group was to ensure that, on the whole, each peer group included a representative cohort of comparable public (and/or private for lower division) institutions based on:
- Carnegie Classification
- Operating Budget
- Student Enrollment
- Faculty FTE
Who are the peers for each campus?
See the attached spreadsheet for peer institutions. EXCEL FILE
How will the university sustainably maintain market parity for staff after the initial market analysis?
A best practice model for sustaining market parity after this initial staff compensation market analysis is complete will be part of the recommendations from the vendor. Sustainability is a key long-term goal.
What will happen to my salary as a result of this review?
The university’s goal, over time, is for all employees to be paid within a consistent salary structure. Going forward, compensation guidelines will be established and followed. Salaries will not be reduced as a result of this project.
Is the intent to eliminate positions?
No. The project focus is on classification and compensation of benefits-eligible positions.
How is Geographic Differential being decided by the vendors performing the market analysis for staff and faculty?
Both vendors handling the staff and faculty compensation market reviews are utilizing the geographic assessment by ERI (Economic Research Institute). The ERI provides analysis based on a proprietary algorithm that utilizes thousands of survey data points from across the country in order to price labor across the US, including remote and rural locations. Read more about the ERI Methodology HERE.
What is the difference between "Cost of Living" and "Cost of Labor"?
"Cost of living” refers to the costs to a consumer in a specific geographic area. It reflects the price of food, housing, groceries, transportation, education, taxes and entertainment. A true cost of living indicator would accurately measure changes over time in the total amount of money required in order to maintain a specified standard of living. Cost of living is dictated by the local demand for and supply of goods and services.
“Cost of labor” refers to the difference in pay or labor market for a job from one location to another. The cost of labor is what a particular geographic market offers as the “going rate” or compensation for its jobs and reflects the local demand for and supply of labor.
Would we perform our own geographical analysis using local businesses, such as banks, in rural communities?
Because the source sampling is so limited, the vendors do not plan to use individual businesses to compare for geographic differential. Additional review of Alaska-centric compensation surveys will be reviewed to validate the ERI geographic assessment.
At what level is compensation compared (department, campus, system)?
There will be multiple groups against which compensation will be compared. In order to perform regression analysis, there needs to be at least 40 incumbents. For populations of comparable positions smaller than 40, a manual assessment and comparison is done. There will be analyses performed at different levels (department, campus, system) for each of the projects.
What will the resulting salary structure look like?
The salary structure will be based on ranges, which will be applied to all current and future UA positions. The ranges will account for differing skill levels and experience. The compensation structure will be a simple, easy to understand framework to ensure appropriate, competitive, and equitable salaries, and allow for flexibility, when appropriate.
When will the market analysis and pay equity review be completed?
Initial drafts of the market analysis, compensation structures, benefits peer comparisons, and pay equity study are anticipated to be reviewed by senior leadership by the end of December. As the initial analysis is being completed, continue to send salary adjustment requests to the appropriate Human Resources office for review.
Do you have additional questions? Please use this form to submit potential FAQ topics. https://goo.gl/forms/0HOrTzVKpkQKHsld2