Transcript Slide 1

University of Missouri
Staff Compensation
October 6, 2009
University of Missouri – Kansas City
Betsy Rodriguez
Vice President for Human Resources
UMSYSTEM.EDU
1
UM System Human Resources
Strategic Plan 2009-2013
People Excellence
UMSYSTEM.EDU
Synergy
2
Vision
University of Missouri is recognized as having a
positive, inclusive, high performance culture based
on cooperation and respect and where the work
environment reflects a community that promotes
work/life balance, values unique contributions, and
allows individuals to make a difference through their
service.
UMSYSTEM.EDU
3
Mission
People First: To provide strategic guidance for the
implementation of best practice human resource
management that enables UM excellence and values
our people as its primary resource.
UMSYSTEM.EDU
4
Critical Focus Areas
• Fully engaged workforce (people first)
• Effective processes
• Excellent service to customers
• Strategic resourcing
UMSYSTEM.EDU
5
People First: Total Rewards System
• Total Rewards System is driver of people strategy--making possible a diverse, high quality,
engaged, and productive faculty and staff
• Compensation and rewards must align with and
be part of university/campus strategic plans
• Total rewards sends a message to (prospective
and current) employees
• Effective use of Total Rewards System resources
requires philosophy, strategy, planning, analysis,
and accountability
• And investment!
UMSYSTEM.EDU
6
Philosophy/Strategy Question
If we value people first, why do our budgets
always begin with mandates such as utilities,
maintenance, and insurance? Why isn’t
compensation the first ‘mandate’?
Compare people assets to physical assets –
we’ve deferred the ‘maintenance’ and that is
causing structural problems.
UMSYSTEM.EDU
7
Additional Questions
• Can faculty and staff explain their salary level, esp
in relation to similarly situated colleagues?
• Can faculty and staff explain their career path,
and the compensation changes that accompany
promotions?
• Can we reward longevity (seniority) and also pay
for performance?
• How important is internal equity?
• How much value do we get for the cost of
benefits?
UMSYSTEM.EDU
8
Consequences of Below Market
Salaries
• Higher turnover, and the associated greater cost of
training new faculty and staff
• Longer time to fill positions and the costs of extended
vacancies in key positions
• Filling positions with 2nd and even 3rd tier candidates
as top-tier candidates accept positions at organizations
that provide higher levels of compensation (and the
longer-term implications this has for the University's image,
ability to draw students both within and out-of-state, impact
on development and research funding, etc.)
• Lower morale and associated reduced productivity
UMSYSTEM.EDU
9
Total Rewards Framework:
Compensation
Begins with philosophy (to mirror our vision):
Examples…
To provide total compensation that attracts and retains
high quality faculty and staff, and that rewards
(seniority?) high performers.
To be competitive within appropriate occupational peer
groups for high performing faculty and staff with
programs that focus on recruitment and retention.
To be at the competitive average by campus, with a core
set of centers of excellence that are leaders in their
fields.
UMSYSTEM.EDU
10
Total Rewards Framework:
Compensation (con’t)
Includes a strategy:
e.g.,
• Where are we now? – see next slide
• Where do we want to be?
• What needs to be done?
• How is it funded?
• How much focus on salary and benefits vs
other ‘rewards’?
UMSYSTEM.EDU
11
Total Rewards Framework:
Compensation (con’t)
Is defined by a set of Objectives and/or Core Values:
e.g.– for Salary:
• Salary ranges will be established based on appropriate markets
• Initial compensation will be within the established ranges, based on
experience and skills– with consideration for internal equity
• Compensation changes will be based solely/mostly on merit
• Merit will be determined by college/campus established metrics
• Differentiation and decision making regarding high vs. low performance
• Metrics will consider all areas of performance critical to university mission
• Salary structure will manage employee growth and development
• Faculty promotions will include a flat dollar amount or a % of salary
• All employee groups will be treated equally for annual increases
(regardless of market position? Regardless of funding?)
Objectives lead to building and communicating salary STRUCTURE
UMSYSTEM.EDU
12
Quick detour to review current
structure
UMSYSTEM.EDU
13
Salary Data: Hourly Employees
Hourly employees
Total payroll $233 million + benefits $49.8 million
Service/Maintenance & Skilled Trades
• Titles such as Police Officer, Child Care Assistant, Food
Services, Custodians, Power Plant Operators,
Electricians, Pipefitters
• Approximately 2,150 employees
• Majority are union eligible positions (about 20% are
union members)
• Meet and confer for annual agreement, nonbinding
• Average hourly rate = $14.50 (range from $8 to $31)
UMSYSTEM.EDU
14
Salary Data: Hourly Employees
Hourly employees (continued)
Office administration / Support
• Titles such as Administrative Assistant, Office Support Staff,
Fiscal Assistant
• Approximately 3,320 employees
• Average hourly rate = $14.50 (range from $7.25 to $35.00)
Technical
• Titles such as Research Technician, Optician Assistant,
Broadcast Technician, Reactor Operator, Computer Operator,
Hygienist
• Approximately 2,050 employees
• Average hourly rate = $16.75 (range from$8.00 to $39.50)
UMSYSTEM.EDU
15
Salary Data: Hourly Employees
Salary Market Data – Hourly Employees
• Compared to local/regional markets
Note: Columbia IS the market for many positions
• Union salary structure is discussed during annual ‘meet
and confer’
• Union salary structure is a step system by which
employees in same title with same length of service
receive same hourly pay
UMSYSTEM.EDU
16
Salary Data: Salaried Employees
Salaried employees
Total payroll $772 million + benefits $165 million
Professional
• Titles such as Programmer / Analyst, Attorney, Psychologist,
Accountant, Engineer, Chemist
• About 4,100 employees
• Average annual salary $50,400
UMSYSTEM.EDU
17
Salary Data: Salaried Employees
Salaried employees (continued)
Administrative / Manager / Executive
• Titles such as Farm Supervisor, Ticket Manager, Admissions
Director, Placement Director, Coach, Provost, Chancellor,
President
• About 1,900 employees
• Average annual salary $79,000
UMSYSTEM.EDU
18
Salary Data: Salaried Employees
Salary Market Data – Professional, Administrators and
Executives
• Sources: Salary.com and other purchased or
generated market databases
• Administrative work varies across many industries
(e.g., agriculture, entertainment, sports, retail,
finance, print, power generation, restaurant, resource
management, housing, research, healthcare, student
services)
UMSYSTEM.EDU
19
Salary Data: Salaried Employees
Salary Market Data – Professional, Administrators and
Executives (continued)
• Maintaining competitive pay across these industries is constant
balancing act as each industry moves in response to economic
conditions and labor markets
• Large salary differences across industries lead to issues of ‘fairness’
and ‘equity’ among university employees (e.g., typically student
services have lower market salaries than finance)
• Assess markets and salary needs within Occupational Group(s)
Exception: Senior Leadership and strategic valued position
are often individually compared to market
UMSYSTEM.EDU
20
Salary Peer Comparisons: Staff
• Do not have complete data on every staff
position compared to market
• Need to do significant work to develop
accurate market comparisons (due to title
inflation and other considerations)
• Selected 150 titles—salaried only for
comparison
UMSYSTEM.EDU
21
Salary Peer Comparisons: Staff
Staff by Select Occupational Groups
120000
69.5%
of mkt
100000
80000
91.9%
of mkt
60000
79.6%
of mkt
90.8%
of mkt
89.7%
of mkt
79.9%
of mkt
UNIV
MKT
40000
20000
0
UMSYSTEM.EDU
22
Salary Increase History: Faculty and Staff
Federal CPI
Statistics
Sept'
Year
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
CPI
Growth
University Merit Guidelines
Growth
Annual
1
4.2%
8.1%
10.0%
11.9%
15.1%
18.2%
20.1%
23.2%
28.0%
4.00%
4.00%
0.00%
2.00%
2.00%
2.00%
2.00%
2.00%
4.00%
4.0%
8.2%
8.2%
10.3%
12.5%
14.8%
17.1%
19.4%
24.2%
CPI for All Urban Consumers (CPI-U) 1982-84=100
Ar ea:
U.S. city average
Item:
Ar
ea:
All items
*
* 3.8% point loss amounts to a $2,000 purchasing
capability shortfall. Realignment would cost $38m.
UMSYSTEM.EDU
23
Total Rewards Framework (con’t)
Is defined by a set of Objectives and/or Core
Values:
e.g.-- for other Compensation:
• Compensation programs will be flexible to
meet individual, department, and campus
needs
• Total Rewards considers issues beyond salary
and benefits– total value proposition
UMSYSTEM.EDU
24
Total Value Proposition
• What are other reasons/programs beyond
traditional compensation (salary and benefits)
that attract and retain faculty and staff?
• What do employees value?
Faculty: Environment/culture, collegiality,
academic freedom, recognition, shared
governance, collaboration opportunities,
gifted/high performing students, lab
space/equipment, professional travel, work/life
balance, etc.
UMSYSTEM.EDU
25
Total Rewards Framework (con’t)
Must be based on Analysis
Our current staff compensation structure is
decades out of date!
UMSYSTEM.EDU
26
Total Rewards Framework (con’t)
Concludes with Accountability:
• Require annual performance evaluations to
justify annual salary changes
• Provide market data to decision makers
• Hold decision makers responsible for ensuring
compensation objectives are met, or there is a
strategy to get there
• Ensure faculty and staff understand the
compensation philosophy, strategy, objectives
UMSYSTEM.EDU
27
Cost of Salary Changes
Cost of salary increases:
$638m operating (state) budget
• Each 1% increase = $8 million
• 2% salary increase would cost $16 million
How to pay for increases?
• Tuition: 1% comp increase = 2% tuition increase
• Other:
 Increases in revenues
 Decreases in expenses (e.g. reduction in work force,
program closures, efficiency savings, vacancy savings)
Do we allow variation by campus?
UMSYSTEM.EDU
28
Quick Review of Benefits
UMSYSTEM.EDU
29
Comparator Institution Benchmarks
Hewitt Associates Relative Value Study
Employer Paid Value
Total Value
Index
Rank
Index
Rank
Retirement
117.9
3rd
77.6
15th
Retirement*
101.1
7th
77.6
15th
Pre Retirement Death-Group Life
107.7
7th
91.2
10th
Long Term Disability
143.9
4th
107.9
8th
Dental
85.3
12th
93.0
12th
Preretirement Health
98.9
10th
102.8
8th
Post Retirement Health-prior to age 65
161.9
3rd
127.5
2nd
Post Retirement Health-age 65 and higher
88.4
8th
103.1
9th
All Post Retirement Health
116.3
8th
110.7
6th
All Benefits (Including Tuition)
106.3
6th
92.3
13th
All Benefits (Including Tuition)*
98.5
11th
92.3
13th
*After 7/1/09 pension plan amendment
UMSYSTEM.EDU
30
Summary Observations of Benefits
• UM offers a competitive array of benefit programs that
are currently slightly below the average of its peer
group
• UM, strategically, assumes risk through self-insurance
when appropriate
• UM employees, through premiums/contributions bear
a significant portion of the cost of providing UM
benefit programs
UMSYSTEM.EDU
31
Summary Observations of Benefits
• UM employees, at the time of purchasing health care
services bear a significant portion of cost for services
rendered
• Areas of significant deviation from the average of the
peer group include:
Above average
Employer Paid Value of Long Term Disability Base Plan
Employer Paid Value of Post Retirement/Pre 65 Medical Benefits
Below Average
Employer Paid Value and Total Value of Dental Benefits
UMSYSTEM.EDU
32
Summary Observations of Benefits
• The 7/1/09 change that requires employees to
contribute to the pension plan has resulted in
a decrease in UM’s ranking among peer
institutions in both the pension and overall
categories
• The majority of peer institutions continue to
offer subsidized post employment health care
benefits
• UM is unique in offering a defined benefit
plan as the primary pension plan avenue
UMSYSTEM.EDU
33
History of Actual UM Contribution Rates
% of payroll
UMSYSTEM.EDU
34