SACUBO Best Practices Staff Compensation Pool Policy Ken Kline, Senior Director, Budget Office

1. SACUBO Best Practices Staff Compensation Pool Policy Ken Kline, Senior Director, Budget Office Shari Rieselman, Budget Analyst April 15, 2014

2. Introduction • Objective • Statement of problem/initiative • Design • Implementation • Benefits • Retrospect • Example

3. Introduction • Northern Kentucky University is a regional, comprehensive, public university located in a major metropolitan area. • Total budget of $224M in FY 13/14 • 1,000 staff employees • 9 divisions • 5 employees (Legal Affairs) to • 430 employees (Academic Affairs)

4. Objective The main objective of the Staff Compensation Pool Policy is to compensate employees fairly and equitably. Employee salaries should be determined on a fair and equitable basis rather than by the available budget in the department. The Staff Compensation Pool provides central funds to maintain equitable salary levels for all employees across the university.

5. Statement of Problem/Initiative Significant staff salary equity issues existed across the university. Staff Compensation Pool was created in support of the Staff Compensation Plan to maintain equitable salaries for all staff positions across the university. Allows for decisions to be made on the fair and equitable treatment of all staff employees. • Starting salaries • Reclassifications • Range adjustments Faculty salary equity issues are not addressed by this policy.

6. Statement of Problem/Initiative With this Central mechanism, managers work with HR to determine fair and equitable compensation for staff employees independent of the funds available in their department. The Staff Compensation Pool Policy applies to all base funded position.

7. Design Every 3 to 5 years, the HR department reviews the Total Compensation Program at NKU. In 2007, we decided to continue the progress already made to achieve market salaries in a more equitable manner. The Staff Compensation Pool was created with approval from the Executive Team.

8. Design A policy had to be created to govern the use of the funds from the pool. The Staff Compensation Pool does not require any additional personnel to administer. The initial investment for the Staff Compensation Pool was $300,000 which was funded by taking the existing VP payroll reserves.

9. Implementation Newly created positions or vacant reclassified positions. The starting salary of a new or vacant reclassified position is set at 95% of the pay grade mid-point (NKUs target market rate). • Hiring above the target market rate • Reclassifications • Equity Adjustments

10. Implementation Hiring Above the Target Market Rate All staff positions that are vacant in the original base budget (at the beginning of the fiscal year) will be budgeted at the position’s target market rate. If a staff position is vacated during the fiscal year, the recurring budget for the position will immediately be set to the target market rate.

11. Implementation Hiring Above the Target Market Rate Once the position is filled, the recurring budget for the position will then be set to the actual starting salary of the new hire. To ensure fair and equitable salaries and prevent discrimination, all starting salaries must be set and approved following HR’s established guidelines and procedures.

12. Implementation Hiring Above the Target Market Rate Starting salaries in excess of the HR recommended rate, must be recommended, with justification, by the hiring manager, reviewed and approved by the Head of the Division and approved by the President. In these cases, it is the responsibility of the department to fund the difference between the target market rate and the salary offered over this rate.

13. Implementation Hiring Above the Target Market Rate Any new base-funded positions created through reallocation must be funded in their entirety (to include salary and benefits) with reallocated funds. The amount of funding needed is the higher of the starting salary of the new hire or the target market rate for the position (plus benefits).

14. Implementation Position Reclassifications For filled positions, the Staff Compensation Pool will fund recurring salary increases which occur as a result of position reclassifications that are recommended and approved by HR.

15. Implementation Position Reclassifications Vacant position reclassifications must be approved by HR and will not be funded by the Staff Compensation Pool. This is because the Staff Compensation Pool is to be used to ensure equity for employees. Vacant position reclassifications do not involve any employees and are considered a budgetary action.

16. Implementation Position Reclassifications These vacant position reclassifications may be funded through reallocation, a budget increase request in the budget process, or special authorization by the President. If a vacant position reclassification results in a savings, that savings will remain with the division.

17. Implementation Equity Adjustments Funding will be provided from the Staff Compensation Pool for competency based adjustments with the current salary range for the staff member.

18. Implementation The VP for Administration & Finance will submit to the Budget Office any requests to adjust pay grade ranges based on the market. Updated central Staff Compensation Pool balance reports are made available on a regular basis.

19. Implementation The staff position base is frozen as of April 1st every year to determine the staff position base for the following fiscal year. This process includes both base salary amounts as well as any merit increases given.

20. Benefits • All staff employees are treated fairly and equitably. • Salary changes are not dependent on the operating budget of the department/division that owns the position. • Departments/Divisions do not need to fund the sometimes large fluctuations in salaries.

21. Benefits • A consistent process is used throughout the university. • Effective collaboration between different departments (HR, Department/Division Heads, Budget Office) results in an efficient process.

22. Retrospect • When the program was first discussed, approval was made at a high level with Powerpoint presentations. • There was no thought about the implementation of the program at that time. • Once approved, the start of the implementation created confusion because no specific policies were created.

23. Retrospect • The Division offices didn’t really understand the use of the Staff Compensation Pool and many thought it was just another source of funding. • Setting up clear policies for the uses of the Staff Compensation Pool is critical for a smooth implementation.

24. Retrospect • Initially there was no method or process for tracking the uses of the funding and there was minimal communication back to the department/division and the Budget Office. • Increased communication and tracking result in better management of the Staff Compensation Pool.

25. Examples Position is vacant and filled with someone whose salary is above the target market rate: Assumptions: target market rate is $32,000

26. Examples Position is vacant and filled with someone whose salary is below the target market rate: Assumptions: target market rate is $32,000 HR Comp Pool = + $2,000 to reset to 95% ( $3,000) for below market rate ( $1,000) balance

27. Examples Filled position is reclassified higher: Assumptions: at new classification, target market rate is $38,000

28. Examples Vacant position is reclassified higher: Assumptions: at new classification, target market rate is $38,000

29. Examples Vacant position is reclassified lower: Assumptions: at new classification, target market rate is $25,000

30. Examples Position is eliminated to fund another position:

31. Questions?