Inside Iowa State

March 14, 2008

Study finds P&S salaries competitive

by Erin Rosacker

After 15 years, the compensation structure for ISU's Professional and Scientific employees went under the microscope in an external review by the Towers Perrin consultant group. P&S employees and their administrators (faculty or P&S) are encouraged to review the report and provide feedback by April 7. The report is available on AccessPlus ("Employee" tab, then click on "P&S Comp Study").

"We feel that it is very important for the community at large to have an opportunity to read the report, think about the report, and to offer comments on the report before any decision is made as to whether to accept the report and move forward on any implementation," said Elizabeth Hoffman, executive vice president and provost, in a presentation at the P&S Council's March 6 meeting.

Compensation vs. classification

Iowa State's compensation structure -- what most P&S employees know as the salary pay grade levels -- currently has 10 pay grades (P-11 through P-20). Each pay grade has a salary range with a set minimum, maximum and midpoint. For instance, if an employee is hired at the P-13 level in 2007-08, the minimum salary is $33,255. The P-13 midpoint is $44,179, and the maximum is $55,102.

ISU's classification system is the list of job categories, such as academic adviser or business manager. How a position is classified determines where it falls in the compensation structure's pay grades. For instance, being re-classified as a "Program Assistant II" bumps a "Program Assistant I" from pay grade 11 to pay grade 13. The classification system was not examined by the consultants.

How they did it

Hired last summer, Towers Perrin took a look at ISU's compensation structure and then compared it to the marketplace. To do this, the consultant:

• Used 156 classfications -- not individual people -- as "benchmark" jobs to compare against similar positions in the marketplace
• Compared ISU's salary levels to various compensation surveys in the education, not-for-profit and general business sectors
• Adjusted for ISU's geographical location, a tweak that shaved 5 percent off the national average salaries

The study did not consider employee health and retirement benefits (total compensation) or individual job factors, such as performance, experience and skills.

Are we competitive?

To be competitive with the market median (or the 50th percentile), the average pay of those benchmarked positions needed to fall within 15 percent on either side of the 50th percentile. The report said ISU hit that range in all three sectors, and in an overall market comparison.

Overall, ISU's benchmarked base salaries were 4 percent lower than the market's 50th percentile. They were

3 percent higher in the education field, 4 percent higher in the not-for-profit comparison and 6 percent under the general business mark. All of them are considered competitive.

"They came to the conclusion that our current compensation system is fundamentally sound and performing well," Hoffman said. "Considering it has been with us since 1993, it was pretty astonishing to them. They expected it to be quite different."

Their recommendations

"The study recommendation is that we essentially keep our current structure, with a little bit of tweaking," Hoffman said.

Towers Perrin's recommendations included adding two pay grades to the compensation structure and expanding the salary range within the grades.

The proposed structure has pay grades 1 through 12. The two new grades are inserted near the middle of the pack and just below the top grade (formerly P-20), respectively. With a broader salary range at some levels, employees could move to a new salary level without being re-classed to a higher P-level.

"For the entry-level positions, it keeps the structure relatively tight," Hoffman said. "As you move through the pay grades, the pay ranges are actually quite large."

Another recommendation was to discontinue yearly adjustments to the salary minimums and maximums. The P&S Council generally matches the rise of the regional consumer price index when making its annual salary policy recommendation, but the Towers Perrin report suggests dropping the use of a cost-of-living increase and using a cost-of-labor formula for periodic reviews of the pay structure.

"That, of course, is going to be a policy decision if this is adopted and implemented," Hoffman said.

What will it cost?

The projected cost of bringing those staff members to their minimum level in the new structure was estimated at $250,000, or 0.18 percent of all P&S payroll. Hoffman said if the report was accepted, administrators would strive to bring those individuals to their benchmark minimums by Jan. 1, 2009, and shoot for full implementation by July 1, 2009.

Luke Alberts, human resource specialist, said policy development would be a big part of the implementation process. That work would include redistributing ISU's classifications within the new salary structure.

What's next

People can ask questions about the report at two campus forums in 2055 Hoover. The first is Monday, March 17, from noon to 2 p.m.; the second is Wednesday, March 26, from 12:30 to 2:30 p.m.

A committee will compile and review the campus feedback, then make a recommendation to Hoffman and president Gregory Geoffroy. The first recommendation would be to accept or reject the report. If the report is accepted, the second recommendation would concern implementation of the new structure.

A comment form for the study is available on AccessPlus and can be returned by e-mail (compstdy@iastate.edu) or sent to HRS, 3810 Beardshear.

Compensation report open forums

Monday, March 17, noon to 2 p.m., 2055 Hoover

Wednesday, March 26, 12:30 to 2:30 p.m., 2055 Hoover

"We feel that it is very important for the community at large to have an opportunity to read the report, think about the report, and to offer comments on the report before any decision is made as to whether to accept the report and move forward on any implementation."

Elizabeth Hoffman, executive vice president and provost