Transcript MRPZ Validation Process - University of Michigan HR

Introduction of Total Rewards &
Implementation of Market Pay Zones
Presented by:
UMHS Compensation
5/15/08
Objectives
• Share work to date regarding the Total Rewards Model
– Process for support
– Outcomes of Market Pay Zone Management Review period for
staff in CFCS
• Introduce UMHS Total Rewards Philosophy for UMHS
– Formalize UMHS Compensation philosophy
• Gain support on next steps toward implementation of Market
Pay Zone structure
– Compensation guidelines
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Total Rewards - The End in Mind
TOTAL REWARDS STRATEGY
Compensation
-Base Pay
-Variable Pay
-Other Pay
-Develop Pay Structure
-Validate Structure
-Develop Salary Administration
Guidelines
-Communicate/Educate
Benefits
-Health
-Dental
-Life & Disability
-Retirement
-Conduct Benefits Study
-Identify market position
-Communicate/Educate
Work Experience
-Training/Development
-Work/Life
-Cultural
-Recognition
-Identify approach to
illustrate value of work
experience
-Communicate/Educate
TOTAL REWARDS TOOLS
-Website
-Statements
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UMHS Current Strategies – WIP
Re-Recruit Current Employees
Invest in Leadership Development
Mentoring, Mentoring, Mentoring
Workforce
Investment
Plan
2003 to Present
Expand and Diversify the
Potential Applicant Pool
Become Widely Recognized
As a Great Place to Work
Coordinate Recruitment Efforts
.
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Management Review
Purpose
UMHS Executive Leadership expressed interest in
gaining organizational support:
• Introduce and gain support on “Total Rewards” model and
new base pay structure
Meet with Management to understand:
•
•
•
•
Current departmental compensation practices
Organizational “fit” of proposed base pay structure
Desired compensation guidelines & resources
Zone implementation preferences
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Management Review
Communication Process
Management Review Period :
•
General information via Total Rewards website
•
Department specific information via UMHS HR
Consultants
– 1:1 meetings with Department Management



All feedback was documented
Department specific issues are being resolved with
the department/HR
Organizational issues are being resolved with
appropriate stakeholders
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Market Pay Zone Review
Outcomes
Review period itself was well-received:
•
Continued dialog on implementation of new classification
system and UMHS compensation practices
•
Continued improvement of job classification within the new
system
•
Process supported philosophy of “transparent” HR
practices
•
1:1 communication to discuss business needs
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Market Pay Zone Review
Outcomes
Management expressed support for:
•
Total Rewards Model
–
•
Target market competitive pay for UMHS positions
–
•
Integrated design of compensation, benefits and work
experience programs to support recruitment and retention
Market target is higher for some positions
The proposed Market Pay Zone structure
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Market Pay Zones
Outcomes
Management expressed interest in:
• Formalized compensation philosophy as part of a UMHS
Total Rewards philosophy
• Formalized compensation guidelines to ensure department
compensation practices align with leadership intentions
– Consistent compensation practices
• A “management implementation” period of market pay zone
structure and accompanying guidelines
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Market Pay Zones
Outcomes
• More information on current UMHS compensation, benefits,
and work experience programs
– To assist in recruitment and retention of staff
– To support selected rewards strategy (competitive
advantage of creating the ideal work experience)
• Information on common career paths and growth
opportunities in UMHS
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Market Pay Zone Review
Outcomes
Over 600 market titles/zones out for review:
•
Approx. 85% market titles/zones have been “validated”;
• Reviewed, discussed and support recruitment/retention
•
Some with recommended changes:
•
•
•
To align with internal pay relationships
Core positions with recruiting and retention challenges
Remainder require further review:
•
Market titles with utilization or design issues
•
Director level titles require more review to ensure proper
pay relationships
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Recommendations
Recommendations
• Formalize UMHS Total Rewards Philosophy
– To set guiding principles for the design of compensation,
benefits, and work experience programs
• Considerations:
– Organizational fit of guiding principles
– Identification of desired market position for programs
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Recommendations
•
Formalize UMHS Compensation Philosophy
–
•
To set guiding principles for the design of compensation
programs
Considerations:
• Identification of desired market position (w/HSEG)
• Identification of pay factors (importance of
performance, LOS)
• Balance of internal and external equity
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Recommendations
•
Formalize UMHS Compensation Guidelines
–
•
To set guidelines around compensation policies &
practices:
Considerations:
– Placement within new market pay zone
– Pay for zone “outliers” (tolerance & criteria)
– Pay change guidelines
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Market Pay Zone Placement Guidelines
(Sample 1)
Developing
Staff
Experienced/
Competent
Staff
Midpoint
Highly
Experienced
&
Highly
Proficient
Staff
Range of Competitiveness
Market Pay Zone
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Market Pay Zone Placement Guidelines
(Sample 2)
Market Pay Zone Placement Guidelines (DRAFT)
First Quartile
Position in Zone
($40,660-$44,470)
Typical Skill and The employee is new to the position
and meets the minimum
Competency
qualifications required for the
Level
position. However, the employee
does not have substantial
experience, is in a learning mode,
and typically requires a training
period to become fully familiar with
the requirements of the position.
Typical
Performance
Level
The employee is new to the job and
is in a learning mode or the
employee is not new to the job but
performance is less than
satisfactory and the employee
needs to demonstrate growth and
improvement in order to meet job
requirements.
Second Quartile
($44,471- $50,820)
The employee exceeds the
minimum requirements of the
position by offering additional
experience, knowledge and skill
level and is progressing to
becoming fully proficient in the
position. The employee needs
minimal training to fully perform all
the requirements of the position.
Third Quartile
($50,821 - $57,170)
Employee is highly experienced is
able to offer significantly more skills
and expertise than is generally
required for the position. Employee
has knowledge of all criteria of the
job and has knowledge of related
areas. Employee typically has
specialized and/or exceptional
expertise. Employee typically
demonstrates skills and
competencies associated with a
market title in a higher pay zone.
Fourth Quartile
($57,171 - $60,980)
Employee is highly experienced and
consistently exceeds job
expectations. Employee able to
offer significantly more skills and
expertise than is required for the
position. Employee has broad
knowledge of all criteria of the job,
of related areas, and UMHS as a
whole. Employee has specialized
and/or exceptional expertise.
Demonstrates skills and
competencies associated with a
market title in a higher pay zone.
The employee is meeting
expectations considering the level
of experience and is progressing to
becoming fully proficient, effective,
and performing the job as it is
defined.
The employee consistently performs
the position at a higher level than
what position requires. S/he serves
as a role model, shows dedication,
and provides significant value to the
organization.
The employee continuously
increases the quality and quantity of
their contribution. S/he serves as a
role model, shows dedication, and
provides high value to the
organization. Is recognized by you
and others as an outstanding
performer.
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Pay Change Guidelines
Level of responsibility
of newly assigned
duties is:
Assign New Market
Title
Different Market Pay
Zone
% Change
Sigificantly Higher: JobBased Change
Yes
Yes / Higher
See Pay Change
Guidelines
Significantly Lower:
Job-Based Change
Yes
Yes / Lower
Case-by-Case
Significant Different:
Job-Based Change
Yes
No / Same
Case-by-Case
Essentially the same
but somewhat
expanded:
Person-Based Change
No
No / Same
0-5%
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Pay Change Guidelines
Pay Guidelines for Job-Based Changes
From Market Title in:
To Market Title in:
Typical % Increase in
Base Pay (1)
Professional Job Role
Professional Job Role
5 -10%
Professional Job Role
Managerial Job Role
10-15%
Managerial Job Role
Managerial Job Role
10-15%
Other
Added Duties
Administrative Differential
Typical %
5-10%
10%
Note 1: Placement beyond midpoint of the new market pay zone is generally not appropriate at initial assignment of the
new market title.
Guidelines are based on actual UMHS pay action occurances 2005-2006. Aligned with common industry wide
compensation practices.
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UMHS Total Rewards
Compensation
Philosophy
UMHS Pay Administration
. FY08 Pay Structures
Managerial Pay Zones
Professional Pay Zones
Establishing Pay Rates
Adjusting Pay Rates
Premium Pay
Pay SPGs
UMHS Pay Administration
Pay Policies
Pay Laws and Regulations
The UMHS Pay Zones apply to all market titles utilized within the UM Health System that are part
of the Career Family Classification System (CFCS). There are two pay structures; one for market
titles in the professional job role and one for market titles in the managerial job role.
The UMHS Market Referenced Pay Zones are designed to establish a competitive range of pay
for respective jobs within the Zones. UMHS Human Resources annually evaluates the external
pay rates of benchmark jobs through pay surveys in order to establish competitive pay rates. The
Zones are reviewed annually for appropriateness and revised to meet the objective of remaining
competitive within the market. Compensation trends in the market and external economic factors
– such as the Consumer Price Index and unemployment rate – as well as internal factors are also
taken into consideration when establishing annual salary and structure recommendations.
The purpose of the Market Referenced Pay Zones:

Inform of the typical salary range for each market title in our labor market to:
o
Provide reference points for setting salaries for current and new staff
o
Manage salaries to be market competitive
o
Measure the competitiveness of salaries
o
Identify possible career opportunities for staff
o
Set realistic salary expectations for staff
The two pay structures are designed to be:


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
Market-referenced
Externally competitive
Consider internal pay relationships
Flexible in addressing our business needs
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Next Steps
Long-term:
– Formalize UMHS Total Rewards strategy
• To support UMHS strategic goals
– Integrate total rewards in employment brand to fully
support recruitment and retention strategies (& WIP)
• (i.e., “The MI difference is U ” Rewards)
– Individual Total Rewards Statements
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Next Steps
• What (unit) management should be able to communicate after
trial period:
 Basics of the Total Rewards Model and how it supports
recruitment/retention and our strategic goals
 UMHS compensation philosophy, overall targets for owned
positions based on metrics and labor market
 Pay range for each of the utilized positions and basics of how
they were established
 Employees’ position in the range and how that relates to
peers, market, and performance
 Opportunities for career development for staff (next levels
and/or closely related market titles)
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