ACU is creating a standardized classification and compensation plan for exempt and nonexempt staff employees. The purpose of this plan is to:
- Ensure fairness and equality
- Develop consistent expectations
- Attract and retain the best talent
- Provide clear paths for career advancement
- Provide financial stability
Classification and Compensation Steps
There are several steps involved in a Classification and Compensation process:
- Determine compensation philosophy
- Conduct job analysis
- Group jobs into families
- Rank positions
- Conduct market research
- Create job grades
- Create a salary range
- Conduct out of salary range analysis
Explanation of the Classification and Compensation Steps
Determining Compensation Philosophy
Before beginning to create salary ranges for the organization, we determine our compensation philosophy. How do we determine the compensation for various roles throughout the university? This philosophy requires a comprehensive look at our core values and practices. The key is to create a philosophy and to be consistent in its application to compensation.
- STATUS: ACU began work on the Compensation Philosophy in June 2016. Members of Faculty Senate, Staff Senate and the Benefits Committee participated in the process. You can read the final draft here.
Job Analysis
A job analysis is a process of gathering, documenting and analyzing information to accurately describe the jobs performed throughout the university. The basis of a job analysis is the job description. A job description describes the essential functions of a position as well as the frequency and importance of related tasks and responsibilities.
A job analysis determines whether the job descriptions are accurate. The process involves comparing each written job description to the job actually being performed. This can be done through observing employees, conducting surveys or interviewing employees doing the job, or a combination of these methods.
- STATUS:
- 10/10/16 We are currently conducting Job Analysis on the following job groupings: Administrative Assistant and Office Management Roles & Technology Roles
- 11/28/16 Job Analysis will begin on roles in the Library, Human Resources, Business and Finance, and Student Services
- The next set of Job Analysis will occur in Facilities, Advancement, Athletics, and Police
- 3/19/17 Job Analysis has begun for Facilities, Advancement, Athletics and ACUPD.
Grouping Jobs into Families
Once the university feels confident that it has a thorough understanding of employees’ roles, responsibilities, and qualifications, we will determine whether to group the jobs into separate job families or have one pay grade system for all positions throughout the organization. For example, an organization may have an administrative job family, technical job family, management job family and executive job family. It may have different job families based on geographic locations (different countries or regions) or different divisions. We will evaluate the data and use the model that best fits the needs of our university.
Ranking Positions
A job evaluation is the process of rank ordering the jobs, not the people, based on job content to demonstrate the relative worth and level of responsibility of all jobs to one another. There are a number of job evaluation methods; two common methods are explained below.
Point method
The content of jobs can be described in terms of factors. Factors are qualities of a job that are common to many kinds of jobs, such as skill, effort or working conditions. Each factor is assigned a weight, or points, according to how much of that particular factor is present in the job. Simply stated, the more points assigned to a job, the more worth the job has to the organization. Jobs with more worth are compensated more than jobs with lesser worth. There may be a group of factors to apply to all jobs or different factors for different functions or a combination of both company-wide and function specific factors. One example is the Hay point method system, which uses only three factors and measures the degree that these three factors are required for each position. The Hay system factors are know-how, problem-solving ability and accountability.
Ranking method
The ranking method is a much more simplistic method of rank ordering the value or worth of each job in comparison to the other jobs within the same job family. This method is often used in smaller organizations that have fewer jobs to compare.
Conduct Market Research
Conducting market research ensures that compensation is comparable to similar positions in the marketplace. When conducting market research on salaries, we will consider the following best practices:
- Job titles vary between organizations. Employers should read the descriptions of the jobs surveyed to make sure that the related tasks, functions, and level of responsibility match the positions at their organizations.
- To obtain current, accurate salary information, employers will need to obtain salary data and/or conduct their own market research. Whenever possible, employers should try to obtain information from more than one market survey resource, at least for benchmark positions.
- Employers should realize from the outset that each organization has jobs that are unique and that it will be impossible to find exact matches for all of one employer’s jobs. Organizations may need to consider jobs that closely fit the principal aspects of a particular job or to consider salary data for more than one type of job.
Create Job Grades
There are two ways to create job grades. Organizations can either use their job evaluation data to group positions within each job family into job grades or use their market data to group positions based on similar salary survey data.
An employer can have as many or as few pay grades as it wants and we’ll make the best decision for our university based on the data collected earlier in the process. A startup or small organization may have only three or four pay grades. The federal government, by contrast, uses 15 pay grades. We will carefully assess what approach is most appropriate for our organization.
Create Salary Range
For each pay grade, we will establish a midpoint, a minimum, and a maximum pay range. One method to come up with a proposed midpoint is to average the market data between the different positions grouped in a grade.
Conduct Out of Salary Range Analysis
At this stage in the process, we will take a look at what we are paying our staff employees in comparison to the data it has collected and the proposed salary grades and ranges for positions. We may need to make some adjustments, but overall we plan to rely on the market data and its pay philosophy to set these ranges.
After the salaries for current staff employees have been placed in the range, it’s possible that some positions may not be in line with the established guidelines and ranges If this is the case, we will need to thoughtfully consider how to remedy these situations.
*Adapted from Society of Human Resource Managers (SHRM)