Job Classification and Compensation Program Documentation Manual August 2006

1. University of Houston-Downtown Job Classification and Compensation Program Documentation Manual August 2006

2. Table of Contents Section 1 Project Objectives and Worksteps 3 Section 2 Proposed Compensation Philosophy 8 Section 3Communications 11 Section 4Position Analysis 13 Section 5 External Analysis - Market Pricing 15 Section 6 Salary Grades and Ranges 20 Section 7 Job Hierarchy and Target Pay Range Assignment 23 Section 8 Impact of Salary Structure 25 Section 9 Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program 27

3. Table of Contents Cont’d Appendix I Project Guidance Team 39 Appendix II Compensation and Classification Program: What it means to you 40 Appendix IIIPosition Description Questionnaire 49 Appendix IV Market Survey Sources 51 Appendix V Salary Structure Non-IT Positions 52 Appendix VI Salary Structure IT Positions 53 Appendix VII Job Evaluation Methodology 54

4. SECTION 1PROJECT OBJECTIVES AND WORKSTEPS 3

5. Section 1Project Objectives and Worksteps OBJECTIVES The University of Houston-Downtown (“UHD”) recognizes that a critical link in achieving sustained performance improvement, achieving best results, and selecting and retaining the best people can be accomplished with a focused and committed workforce who is motivated by a strategic, meaningful, rewarding and viable classification and compensation program. In an effort to achieve this link, the UHD classification and compensation program must address the pay equity for all positions internally and relative to the marketplace, maintain an objective job evaluation system and consistently apply standard procedure(s) for pay administration across all departments. UHD made a commitment in March 2006 to study its classification and compensation practices for all employees as they relate to both external competitiveness and internal equity. With assistance from Deloitte Consulting, a classification and compensation program was developed for all positions that embraces the following characteristics: • Establishes and reinforces an effective link between UHD’s strategy, organizational demands, work expectations, individual needs and compensation; • Attracts, retains and motivates the “best and the brightest” employees; • Reflects UHD’s unique organizational culture, mission, values and pay philosophy; • Provides an equitable and rewarding pay program for all employees; • Is in compliance with the Fair Labor Standards Act (“FLSA”), Americans with Disabilities Act (“ADA”), and related legislation; • Provides a consistent method of valuing jobs across departments within UHD; • Is easily communicated by the UHD leadership and is understood by all employees; 4

6. Section 1Project Objectives and Worksteps OBJECTIVES Cont’d • Provides a foundation for future innovative human resource management approaches and strategies; • Maintains cost effectiveness; • Provides appropriate and competitive ranges of opportunity with respect to base pay for each position; and • Establishes consistency in policies and procedures for managing and administering compensation between departments. WORKSTEPS Based on discussions between Deloitte Consulting and the UHD leadership team regarding the characteristics listed above, a market-based whole job approach for all positions was recommended. This method of job evaluation allowed UHD to use competitive market information as a foundation for its pay program while measuring specific compensable job factors for objective internal pay comparisons. The following worksteps were used during this project to attain the stated and desired classification and compensation program characteristics: • Orient UHD leadership team including the President, his Executive Council and the Employment Service and Operations (“ESO”) team; • Confirm objectives, scope, process, methodology and work steps; • Collect background data; 5

7. Section 1Project Objectives and Worksteps WORKSTEPS Cont’d • Develop and implement communication strategy; • Present general employee sessions to introduce the study and address questions, issues and concerns; • Conduct “key stakeholders” interviews; • Develop a written compensation philosophy statement; • Select salary survey sources from the Deloitte Consulting library; • Review and format employee database files; • Analyze positions, titles, and organizational structure; • Develop, administer, collect and organize Position Description Questionnaires (PDQ) for all the UHD positions; • Develop and administer separate form for supervisors (SPDQ) to provide feedback and comments on completed subordinate PDQ; • Read and analyze PDQs and supervisor feedback to determine benchmark sample; • Combine and edit job titles based on job requirements listed in PDQ and input from ESO team and UHD department heads; 6

8. Section 1Project Objectives and Worksteps WORKSTEPS Cont’d • Develop job descriptions for each job at UHD; • Conduct competitive market analysis for benchmark jobs; • Develop recommended pay structure based on market data; • Conduct Job Value Matrix (“JVM”) approach to reconcile internal/external equity including “slotting” of non-benchmark jobs with the ESO team and UHD department heads; • Reconcile and review job slotting to ensure campus-wide equity for each job with further input from ESO team and UHD department heads; • Finalize job slotting and send each manager a list of their incumbents including new job title, proposed grade, minimum and midpoint of the grade; • Review comments from managers; • Generate cost impact report(s) of all employees with below minimum costs for each job; • Develop recommended salary administration policies and procedures; • Present results and recommendations to the President, Executive Council, Department Heads, and employees; and • Develop Documentation Manual. 7

9. SECTION 2PROPOSED COMPENSATION PHILOSOPHY 8

10. Section 2Proposed Compensation Philosophy The compensation philosophy of UHD supports the need for outstanding talent to provide the exemplary level of service, creativity, knowledge, business savvy, and leadership to fulfil its mission and setting a standard of excellence in virtually every facet of higher education. KEY OBJECTIVES • Provide a total compensation program flexible enough to adjust to changing economic conditions and to individual needs; • Provide a competitive and affordable level of compensation for their highly qualified, motivated and diverse workforce in exchange for expected levels of performance and results; • Maintain fair, consistent and equitable total compensation practices in alignment with UHD’s core values and mission; • Attract, retain, and motivate highly qualified and effective individuals; • Foster individual development, loyalty, and team work; • Encourage a career-long commitment to UHD; • Establish compensation program policies, procedures and guidelines that are consistent with the judicious expenditure of funds entrusted to UHD; and • Ensure accountability for compliance with University of Houston System’sBoard of Regents rules and regulations and State of Texas statutory requirements. 9

11. Section 2Proposed Compensation Philosophy PROGRAM PRINCIPLES • Provide an equitable system of job evaluation and classification covering all non-faculty, non-police positions at UHD to properly reflect internal relationships; • Provide a pay program which is fully competitive in the market for all employees based on appropriate public and private sector employers with whom UHD competes for talent; • Provide a fair, non-discriminatory and compliant pay program with all federal and state laws and regulations; • Recognize the positive contributions of our dedicated employees who consistently provide the best value added performance and results for all that we serve; • Monitor and evaluate continuously all facets of the compensation program to ensure awareness and sensitivity to relevant market fluctuation(s) and/or movement; • Establish written policies, procedures, and guidelines for managing and administering pay in a consistent and equitable manner throughout UHD; • Communicate the total compensation program to all employees to ensure understanding of general administrations principles, specific pay policies and practices, and the process used to determine job classification and individual pay; • Provide appropriate ranges in a salary structure which encourages individuals to attain the skills and knowledge necessary to increase their value to UHD, both on an individual basis and as a participant on a work team; and • Emphasize and recognize the importance of exemplary work performance and reward it using merit pay programs and/or other forms of formal recognition including non-cash rewards. 10

12. SECTION 3 COMMUNICATIONS 11

13. Section 3Communications Communications regarding the classification and compensation program were an essential part of the entire process. The UHD ESO team, in collaboration and cooperation with Deloitte Consulting, were diligent in their efforts to keep UHD employees informed on the status of the project, addressing their questions, issues and concerns directly and encouraging employee involvement throughout the duration of the project. Communication included memoranda; scheduled meetings with the UHD ESO team to keep them abreast of all work steps and project-related information and to encourage their involvement on project management decisions; open employee meetings to inform employees of the objectives of the study, answer questions, and listen to any thoughts or comments with respect to the current UHD classification and compensation program; key stakeholder interviews; pre- and post-study meetings with department heads for information sharing and reporting; and PDQ and supervisor questionnaire (SPDQ) administration. In addition, Deloitte Consulting drafted an employee communication brochure entitled University of Houston-Downtown’s Classification and Compensation Program: What It Means to You. The purpose is to provide a copy of this brochure to each UHD employee and thereby provide a thorough overview of the classification and compensation program. 12

14. SECTION 4POSITION ANALYSIS 13

15. Section 4Position Analysis The task of analyzing each UHD non-faculty position was comprised of a process which included: a requirement for all UHD employees to complete a PDQ designed to obtain general information related to the primary purpose, duties and responsibilities, qualifications, and specifications for their position. Upon completion, the PDQs were emailed directly to Deloitte Consulting for review. All UHD supervisors were encouraged to complete a supervisor PDQ (SPDQ) that reviewed the PDQs of their subordinates to ensure consistent and accurate responses. All SPDQs were also sent directly to Deloitte Consulting via email. The PDQs were used primarily for preparing job descriptions, editing and standardizing job titles and selecting benchmark jobs. The PDQs were not used to evaluate a person’s worth in the position, place he or she in a pay range and/or evaluate their performance in a position. 14

16. SECTION 5EXTERNAL ANALYSIS - MARKET PRICING 15

17. Section 5External Analysis – Market Pricing In addition to assessing the current pay, Deloitte Consulting conducted a competitive market analysis of the established benchmark jobs. The market analysis of UHD’s base salary compensation levels involved comparisons with similar jobs in the public and private sector (including non-profit organizations as well as for-profit companies). The comparisons were drawn on the following basis: • Utilizing the PDQs completed by UHD employees and input from the UHD ESO team when necessary, UHD jobs were compared to summary job descriptions in relevant commercially published surveys. • Market comparables were made for 122 jobs out of 242 jobs within UHD; these benchmarkjobs were representative of all departments and levels within UHD. • The market analysis included data from 17 recently conducted and commercially published salary surveys. Market data was adjusted by an annual salary market index of 3.3% from the survey effective date to July 1, 2006. 16

18. Section 5External Analysis – Market Pricing • Jobs were analyzed with a local, regional, or national market focus depending on relevant scope factors which effectively defined the market for a specific job. A rule of thumb is to determine where UHD typicallyrecruits from to fill a job vacancy and conversely where UHD typically loses people to in the market. These scope factors considered in the market comparisons, for example, include the following: local, regional, national, industry (e.g., colleges/universities), budget/revenue size and/or for-profit/not-for-profit companies, etc. During the Job Value MatrixTM (“JVM”) sessions the ESO team, including UHD department heads, had the opportunity to discuss any anomalies in their organization and/or with certain jobs during the scheduled meetings. Explanations of the market analysis reports and discussions regarding matches were provided when necessary. Deloitte Consulting and the ESO team reconciled the JVM results across UHD to ensure campus-wide equity. Further input from UHD department heads was sought out in some instances. The final recommendation was sent out to UHD department heads for their review. Deloitte Consulting then presented the study findings with the minimum cost impact to the UHD President for final approval and implementation. 17

19. Section 5External Analysis – Market Pricing When comparing an individual employee’s position versus the market median or UHD’s overall average versus the market, a few points should be considered prior to drawing conclusions: • Length of time the employee(s) has held the position: Typically, a new employee has not had a chance to assume all the responsibilities of the position. As the employee grows in the job, pay increases will enhance pay and pay progression, thereby, moving the employee closer to the market median over a reasonable amount of time (typically 3 to 5 years) depending on the nature and level of the job. • Previous employee(s) work experience: Typically, employees with previous applicable work experience will be paid further in the range than less experienced employees depending on the amount and quality of work experience. • Employee(s) job performance: Typically, job performance will determine how fast and how far employees move through their ranges. Length of time an employee has held a position, previous employee work experience, and job performance are not mutually exclusive of each other in determining range penetration for an employee. 18

20. Section 5External Analysis – Market Pricing • Overall compa-ratio: For the purposes of this report, this statistic expresses the relationship of the average incumbent pay to the midpoint of the salary range. The average incumbent pay has been adjusted for those employees who fell below the minimum of their new salary grade. When creating a salary structure, the midpoint of the salary range typically represents the market median; therefore, the compa-ratio indicates how correlated an organization's salaries are to the market. The average compa-ratio for UHD is approximately 89%. Most organizations strive for a compa-ratio of 100%, which would indicate they are highly correlated to the market. Having a compa-ratio less than 100% would therefore illustrate that UHD is paying on average 11% below the market median. Typically, a more tenured workforce will tend to have a higher compa-ratio (often above 100%) than a workforce with a shorter service history at the organization. In addition, compa-ratios vary according to how long an individual has been in the job, previous work experience and job performance. The appropriateness of UHD’s market position for a job should be determined by the competitiveness of the overall total compensation package of UHD including benefits and even intangible rewards (e.g., amiable work environments, opportunities for advancement, etc.). 19

21. SECTION 6SALARY GRADES AND RANGES 20

22. Section 6Salary Grades and Ranges Using the external market data collected for the benchmark positions, two pay structures were developed for all non-faculty, non-police UHD positions: Non-IT staff positions and IT staff positions. MINIMUM The minimum salary rate that is normally paid to a employee who is beginning the duties of the job and meets the minimum requirements of the job. Represents the typical marketplace “entry” rate. MIDPOINT The rate which should be targeted for UHD employees who are fully qualified and consistently perform the responsibilities of the position at a satisfactory performance level. Represents the competitive “going rate” in the marketplace for a fully competent employee. MAXIMUM The maximum salary rate that should normally be paid to very experienced UHD employees whose performance consistently exceeds expected results of the job over the duration of the classification and compensation program UHD has adopted. 21

23. Section 6Salary Grades and Ranges CLASSIFIED SALARY STRUCTURE The recommended salary structure for non-IT staff positions includes 25 pay grades. The width of each grade (i.e., typically referred to as “pay range” or “pay spread”) is the “spread” from the minimum to the maximum of the range. The pay range begins at 35% for those jobs in Grade 10 and increases to 65% for jobs in Grade 34. The recommended salary structure for IT staff includes 17 pay grades with a range spread at the bottom of 45% and 65% at the top. Range spreads vary based on promotional opportunities and the level and sophistication of skills required for a given employee population. The ranges for each individual employee are calibrated to fluctuate based on the recommended grade for the employee’s job, the number of days per year and the hours per day the employee works. Entry level positions that require skills that are quickly mastered usually have narrower pay ranges than supervisory or managerial or higher-level technical positions. Additionally, individuals in lower-level positions typically have a greater number of opportunities over time to be promoted to higher level positions. Senior-level positions typically require a longer learning curve and often have less structured jobs resulting in greater individual performance differences and variability among job responsibility. Therefore, range spreads for senior-level positions are generally wider to provide for more pay opportunity for individual “career growth”. In addition to the range width, a salary structure contains midpoint differentials. Midpoint differentials refer to the percentage between pay-grade midpoints. The midpoint differential for the non-IT staff salary structure is 9% on average between grades and 10% on average for the IT salary structure, which is a reasonable average differential between grades that will alleviate potential compression issues. 22

24. SECTION 7JOB HIERARCHY AND TARGET PAY RANGE ASSIGNMENT 23

25. Section 7Job Hierarchy and Target Pay Range Assignment Deloitte Consulting set up an initial matrix hierarchy (ranking) using only the information derived from the market analysis. The market median was computed for each benchmark job and this market median determined the initial grade assignment by slotting it to the closest structure midpoint. For those jobs with no market data available (non-benchmark jobs), the UHD department head was asked to slot the job using their knowledge of specific job factors (scope of responsibility and accountability, required skill sets and general qualifications, supervisory responsibility, etc.) and value to UHD in relation to other jobs in the organization hierarchy. Any hierarchical differences that existed between the market and internal values were reconciled by the ESO team with assistance provided as needed by Deloitte Consulting. The ESO team, with Deloitte Consulting, confirmed and reconciled the assigned grades across all departments. The final approval came from the ESO team on all jobs and the grades in which they were placed. This JVM process of reconciling differences between the external market and internal relationships, is critical to an effective job evaluation system. After reviewing all recommended pay range assignments and reconciling any differences that existed across the entire organization and considering all proposed grades from the ESO team, the resulting pay range assignment for each job represented a salary range (i.e., paypotential) that reflected the ESO team and UHD department head’s assessment of its worth (i.e., jobvalue). 24

26. SECTION 8IMPACT OF SALARY STRUCTURE 25

27. Section 8Impact of Salary Structure Once all jobs received a recommended grade assignment, the immediate cost impact of those assignments in the salary structure was analyzed. Typically, the most immediate cost of implementing a compensation program is adjusting those employees’ salaries that fell below the minimum of their assigned salary range in the proposed structure. As illustrated in the graph below 104 positions or 25% of UHD employees fell below the minimum of their salary grade. The cost of adjusting those employees to the minimum was approximately $269,045, which is approximately a 1.7% increase over the current base salary of $15,970,005. In addition, it was found that 2% (5 employees) were currently paid above the maximum of the assigned salary range amounting to $27,552. 26

28. SECTION 9RECOMMENDATIONS FOR IMPLEMENTATION AND THE ONGOING MAINTENANCE OF THE CLASSIFICATION AND COMPENSATION PROGRAM 27

29. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Ongoing maintenance of the Classification and Compensation Program is critical to the effective “life” of the program. At a minimum, we recommend that UHD commit to the following administrative procedures and policy guidelines: ADMINISTRATIVE PROCEDURES: • Develop an appropriate communication strategy addressing all employees that briefly explains the outcome of the Classification and Compensation Study and UHD’s strategy for implementation of the new program. • Develop a formal strategy for making appropriate salary adjustments over a specified period of time (e.g., six months, one year, or longer) beginning with those individuals who are currently paid below the minimum of their salary range. • Develop a formal strategy to be followed for those individuals who are paid above the maximum of their salary range. • Because UHD’s salary ranges are based upon current competitive salaries, UHD should keep abreast of any changes in the markets for which UHD competes for talent. We recommend that UHD review salaries in the market for a sample of jobs (30-40%) once each year. These jobs should be “benchmark” jobs or those that are easily found in published survey sources and representative of all levels within UHD. 28

30. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program For the most part, we recommend that these benchmark jobs remain the same from year to year in order to obtain the best perception of salary movement trends in the marketplace. This annual review may be done by UHD with or without the assistance of Deloitte Consulting. • UHD should make recommendations, as appropriate, with respect to salary structure adjustments to ensure the competitiveness of the salary program. Most organizations who monitor the competitive marketplace for salary movement (e.g., referencing WorldatWork and/or conducting ongoing benchmark analysis) will recommend adjustments to their own salary ranges annually or every two years. Any recommendations, however, should consider both UHD’s current pay strategy relative to the market and ability to afford any adjustments to individual salaries that might be suggested by a change in salary ranges. • Develop and implement formal, written policies and procedures for job evaluation classification and salary administration. • Provide initial and ongoing supervisory training with respect to the policies and procedures for the salary administration program to all supervisors. 29

31. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program POLICY GUIDELINES Plan Implementation All personnel employed by UHD should be assigned to a position which corresponds directly to the established salary structure. The rate of paydays or 2,080 hours in a fiscal year for the schedule is depicted in annual terms to establish a common and standard reference point, i.e., 2,080 hours or 260 days. Formulas should be applied consistently in calculating either annual salary or hourly rates which deviate from those standard rates, i.e., working less than 260 days or 2,080 hours in a contract year. • Maximum or Above Maximum of Range: Any personnel at or above the maximum of their respective pay grade should receive no pay increase added to base pay until such time that the maximum of that pay grade is adjusted upward and the salary structure reflects such change. Employees at the maximum or over the maximum of their salary grade could be eligible to receive an annual lump sum payment based on merit (i.e., not added to current pay) until such time that the salary falls within the pay range. • Within the Pay Range: All personnel who fall within the pay range for their respective job should be placed within the range, which has been adopted and incorporated into the salary structure. • Below Minimum of the Pay Range: All personnel will be within the pay range of an assigned grade; no personnel should be paid below the minimum of their respective job grade as prescribed by the proposed salary structure unless the individual(s) is an anomaly and/or noted exception. 30

32. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Advancement UHD employees will have the opportunity to advance within their pay grade based on tenure in their position and/or at UHD. Advancement can also be based on having a minimum of average performance rating on file. Promotion Any UHD employee appointed to a new position in a job at a higher grade should receive a pay increase which is either equivalent to the minimum of the new pay grade or seven (7) percent above the individual’s present salary, whichever is higher. (Note: This pay increase is subject to the financial resources to pay such an increase). Employees should successfully complete the probationary period for their respective new position, i.e., six (6) months for hourly employees (non-exempt) or twelve (12) months for salaried employees (exempt). If for any reason employees are transferred back to their former position or a similar position within the same grade as their former position during the probationary period, salaries should be immediately reduced to the amount earned prior to promotion. 31

33. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Hiring All individuals who are new UHD employees and whose knowledge, skills, abilities, and experience meet the minimum requirements of the job should be hired at the minimum of the salary grade for the job for which they are being hired. However, an employee may be hired at a higher starting salary based on years of directly related and documented work experience, not to exceed the mid-point for the respective position, provided the salary doesn’t exceed that of an incumbent in the same position within the same department. Related work experience should be credited with three (3) percent for each year of relevant experience up to five (5) years or fifteen (15) percent of the minimum of the assigned pay grade. Any exception for a new employee’s salary must be based upon the recommendation of the UHD department head, and approval by ESO and the University President. The primary determinant for any exception should be based on a combination of the following: 1) demonstrated and documented need to fill a job; 2) the sense of urgency to fill such a job; 3) the availability of qualified individuals with the required level of skills, knowledge, experience and competence; 4) the documented competitive market pay required to attract and retain a person under these exceptional circumstances; and 5) the importance of maintaining internal equity based on current incumbent(s) years of related work experience as compared to that of new employee. It is the intent of UHD that newly hired employees (within the guidelines of exception or otherwise) will not receive more favorable treatment than existing UHD employees. 32

34. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Rehiring Former UHD employees rehired within one year into a position with the same grade as the one previously held should be placed within a pay grade of the current salary structure nearest to their previous salary, provided UHD requires the level of skill, knowledge, experience and/or competency a former employee brings to the job. In no case should a new salary of a rehired employee be above their former salary unless there has been incremental change to the current salary schedule, or the rehired employee has acquired new licensing, certification(s), and/or education that provide a value-added to the position; and under no circumstances should the new salary exceed the maximum of the grade. Former employees rehired after one year’s absence or rehired for a position in a different salary grade should be treated as new employees, i.e., paid up to the midpoint of the range for the position for which they are hired. 33

35. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Job Re-Evaluation and Reclassification When a job is reclassified to a higher pay grade because a re-evaluation indicates the major duties and responsibilities have increased significantly, the employee may be placed at the minimum of the new pay grade or receive a four (4) percent pay increase above the employee’s current salary, whichever is higher. If such a re-evaluation is effective with the beginning of a compensation year, the employee should first be placed in his/her new grade before granting the yearly increase commensurate with the old pay grade. An employee should not be paid less than the grade minimum or more than the grade maximum when a re-evaluation increases a position’s grade. When an employee’s position is reclassified to a lower grade because a re-evaluation indicates reduced duties (e.g., due to a program cutback), a salary adjustment may occur to ensure compliance with UHD’s compensation plan. If the employee’s salary is above the maximum of the new grade, no annual salary increments should be granted until the maximum for the grade is increased. Once an individual has been appropriately placed in his or her new grade, increments will proceed under the UHD compensation program advancement rules. 34

36. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Involuntary Transfer When an employee is given an involuntary transfer to a position with a lower grade or same grade (e.g., staff reduction due to a program cutback), a salary adjustment may occur to ensure compliance with UHD’s compensation plan. If the employee’s salary is above the maximum of the new grade, no annual merit salary increments should be granted until the maximum for the grade is increased. If the individual’s salary has not reached the maximum of the new category, increases should be granted that conform to the compensation management (i.e., range penetration) guidelines until the grade maximum is attained. Voluntary Transfer to a Lower Grade If employees are transferred at their own request, or at UHD’s request, to a position with a lower grade, a salary adjustment may occur to ensure compliance with UHD’s compensation plan. An employee’s pay will remain the same for the remainder of the compensation period assuming the employee’s pay falls within the pay range of the lower grade associated with the transfer. However, under no circumstances will any transfer or move to a lower grade exceed the maximum pay for that job. 35

37. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Interim Job Appointment Employees appointed to the acting capacity of a supervisor or other management position may be given a salary adjustment for the period of the assignment to the position. The adjustment for the interim job appointment is between 5% and 7% of the salary of the appointee, as recommended by hiring manager and approved by Manager of Compensation. NOTE: This adjustment is subject to the financial resources to make such an adjustment. Non-Exempt positions may be eligible for interim appointment on a case by case basis, as approved by the Manager of Compensation. New Positions With regard to new positions, a job description should be prepared and the position should be evaluated and assigned to a salary grade by Employment Services and Operations and before the position is advertised, an employment offer is tendered or a salary is established. The appropriate Department Head/Director responsible for the new position should offer recommendations to Employment Services and Operations for his/her disposition and/or action. Positions under consideration should be evaluated in accordance with the appropriate position evaluation plan (i.e., Job Value Matrix) and the results of the evaluation should be compared with previously evaluated jobs to ensure internal equity. That is, these new jobs should be slotted into the current structure based on the level and scope of responsibility, duties performed and the value in relation to other jobs in the hierarchy. In addition, new positions should be benchmarked to the market if applicable to assist in the salary grade assignment of the new job. 36

38. Section 9Recommendations for Implementation and the Ongoing Maintenance of the Classification and Compensation Program Nonexempt Employee Pay UHD non-exempt employees will be paid one and one-half times their regular hourly rate of pay for all hours worked in excess of 40 hours in a work week, depending upon schedules assigned. When financial resources do not allow for one and one-half pay, non-exempt employees may be compensated with one and one-half compensatory time off. Exempt Employee Pay Exempt employees are not eligible for overtime pay as outlined in the Fair Labor Standards Act. Exceptions to this policy will be recognized for exempt personnel in certain job classifications. Instances that may lead to compensation for overtime hours include: (a) to remain competitive in labor market; and (b) working out of job classification in order to provide staff coverage. The Vice President for Employment Services and Operations, in coordination with the Department Head/Director, must approve exempt positions authorized for payment of (straight time) overtime. Exempt employees eligible to receive payment for overtime will be paid in accordance with UHD’s approved schedule. 37

39. Appendices 38

40. Appendix IProject Guidance Team Ivonne Montalbano Vice President for Employment Services and Operations Tomas Turrubiates Manager of Compensation 39

41. Appendix IICompensation and Classification Program: What It Means To You University of Houston-Downtown COMPENSATION AND CLASSIFICATION PROGRAM What It Means To You Prepared by: Deloitte Consulting, LLP 333 Clay Street Suite 2300 Houston, Texas 77002 (713) 982-2000 40

42. Appendix IICompensation and Classification Program: What It Means To You All employees contribute to the success of the University of Houston-Downtown (“UHD”). The collective efforts of you and your fellow employees determine the quality of services we provide to our students and community. We recognize the two-way commitment necessary to fulfill our goals. We have an obligation to provide you fair compensation that is based on your experience, the complexity of your position, and the salary and wages budgeted by UHD and approved by the UHS Board of Regents. Your obligations to UHD include effective performance in your position and demonstration of our philosophy to set a standard of excellence in virtually every facet of higher education. The wages/salaries you receive are based on an objectively determined and fairly administered compensation and classification program wherein you can be assured that you are receiving pay that is competitive and fair for your position. The key to the success of the Compensation and Classification Program (“Program”) is a clear understanding of how it is designed and how it works. The purpose of this brochure is to provide you with an overview of UHD’s Compensation and Classification Program-- what it is and what it means to you. 41

43. Appendix IICompensation and Classification Program: What It Means To You Program Objectives At UHD, we believe in paying what a position is worth and rewarding employees for experience and work-related performance. UHD realizes that our future success depends heavily on your ability to grow and develop within UHD and be rewarded with a fair salary in relation to your experience, commitment, contribution, and value of the position. We designed the Program around characteristics that will make it operate effectively on a continuing basis. Internally Equitable: The Program provides salary ranges for all positions that fairly reflect the value of each position, relative to all other positions at UHD. Externally Competitive: So that we can continue to attract highly qualified personnel available, our salary ranges will be competitive with similar positions in other higher education institutions, not-for-profit organizations in the public sector, as well as the private sector. Continuous and Flexible: The Program will respond to changes in the work marketplace; provide for the evaluation of new position specifications as they are created; and be easily administered. Personally Motivating: The Program provides opportunities for recognizing and rewarding experience, contribution, and commitment. 42

44. Appendix IICompensation and Classification Program: What It Means To You How the Program Works Here is how the Compensation and Classification Program works. Positions are formally described to obtain a clear understanding of what each position is expected to accomplish. Pay for comparable positions in other not-for-profit organizations in the public sector as well as relevant private sector organizations is determined through surveys and market analysis. Each position is evaluated using a dynamic position value matrix and “slotting” system to determine the value of the position in relation to all other positions at UHD. Positions with similar levels of responsibilities are assigned a competitive pay grade and salary range, each salary range has a pay grade designated for it… ... and pay increases are determined by shifts in the market rates and the impact on the salary structure and UHD salary and wages budget. JOB DOCUMENTATION MARKET PRICING JOB EVALUATION GRADES/SALARY RANGES PAY INCREASES 43

45. Appendix IICompensation and Classification Program: What It Means To You Position Documentation The first step in designing a pay program is to obtain a clear understanding of what each position is expected to accomplish. This is done by completing written descriptions (position specifications) for each position. The position specifications list the qualifications (training, education, experience and the like) required to obtain the position, as well as the position duties and responsibilities involved in its performance (what you are expected to do). Each position is expected to accomplish specific end results and position descriptions provide a record of the most important facts about the position. Because of their importance, position specifications are updated as needed. In this way, you can be sure that the descriptions, as well as the evaluation and salary range developed from it, are current and accurately reflect the worth of your position to UHD. It is important to keep in mind that only positions are analyzed, not people. Market Pricing Making sure that the levels of pay at UHD are comparable to other higher education institutions, not-for-profit organizations, as well as the public and private sector requires a thorough analysis of what other organizations pay. Since UHD uses position specifications that are consistent with the position descriptions used by other organizations, it is possible to compare directly for many of our positions. 44

46. Appendix IICompensation and Classification Program: What It Means To You Market Pricing Cont’d Best practices suggest that organizations utilize several salary surveys – locally, regionally, and nationally – to determine how much other organizations are paying. Because UHD wants to compare positions accurately, we selected surveys that best represent where our potential employees are likely to be hired. For example, UHD could use local surveys for those positions that may be filled in the general Houston area. Regional surveys could be used for those positions where we must look beyond our immediate geographical area. National surveys could be used for positions where UHD must extend a search even further. By taking the surveys and applying sound judgment, UHD can accurately “market price” a position and reflect the so-called “going rate” or market average for a fully competent person to fill a position at UHD. To make sure our policy remains current, it is recommended that market information be reviewed at least annually. In this way, we can be certain that UHD remains competitive in the marketplace. 45

47. Appendix IICompensation and Classification Program: What It Means To You Evaluating Positions • Determine the value of each position • Show the relationship of one position to another • Assign each position a pay grade reflecting the position’s value The position evaluation system used to analyze each position is the same process used by thousands of organizations throughout the country and around the world. And since each position is evaluated using this same process, you can be assured that our positions are accurately and fairly given a value based on the same criteria. It’s important to remember that, in this stage of the program, no attempt is made to evaluate the person in the position or that person’s performance. We consider only the position itself, as defined by its position specification. 46

48. Appendix IICompensation and Classification Program: What It Means To You Grades/Salary Ranges After positions are evaluated and a market average is determined, they are assigned a salary range in the salary structure to reflect the position’s value to UHD and external pay practices. The structure consists of salary grades and ranges of pay opportunity with a minimum and maximum established around a midpoint. Each pay grade range provides sufficient room and opportunity to recognize competency, performance, and amount of experience. MINIMUM The minimum salary rate that normally would be paid to a member of UHD staff who is beginning the duties of the position and meets the minimum requirements of the position. Represents the typical marketplace “entry” rate. MIDPOINT The rate which should be targeted for employees who are fully qualified to perform the responsibilities of the position at a satisfactory performance level. Represents the competitive “going rate” in the marketplace for a fully qualified employee. MAXIMUMThe Maximum is the highest level of pay for a job within this grade. Employees may not be paid at a base rate above this amount, nor receive any merit increases resulting in a rate of pay above this amount. Employees who have extensive work experience, are highly competent professionally, and may have a significant number of years of experience are generally paid between the Midpoint and the Maximum of the pay range. Remember that the salary range is based on the characteristics of the position and not the skills of the person holding that position. When necessary, our salary ranges are adjusted to reflect changes in the marketplace. 47

49. Appendix IICompensation and Classification Program: What It Means To You Summary UHD’s Compensation and Classification Program is designed to make sure you are paid fairly and competitively. Our Program also provides for your salary to grow as you grow and perform in your position. As positions change, new positions are added or competitive conditions change, the Program will take these factors into account so that you and all employees will continue to be paid on a fair and equitable basis. 48

50. Appendix IIIPosition Description Questionnaire* 49