Transcript Legal Update - IPMA-HR

SHIFT IN PAY MANAGEMENT:
JOB RATE FOCUS
Bruce Lawson, Managing Director
Ronnie Charles, Principal Consultant
Sandra Spellman, Senior Consultant
ipma-hr.org
What Are We Talking About?
 Evolution – Moving from public
sector salary grades to market
aligned pay structures
 Modernization of Pay Management
 Job Rate – How do job rate pay structures work?
 Pay the Job or Pay the Person?
 Why Change Pay Administration?
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Benefits
Challenges
Step-Based Salary Systems
 Historically, typical of the
Federal Government,
Education and the Military
 Steps associated with pay grades or ranges that
may indirectly represent the internal equity of the
organization
 Steps often valued and spaced to accommodate
budgets
Step-Based Salary Systems
 Standard progression rates within a pay range
 Intent is to have “fairness” in pay trump
contribution to the organization
 May be viewed as “objective” rather than applying
subjective criteria
Step-Based Salary Systems
 Pay progression is based upon:
 Longevity
 Skill/Knowledge Acquisition
 “Merit”
 Performance (Usually “pass/fail”)
 Pressure to add steps to keep
employees climbing
What is a Job Rate?
 Often set at the mid-point of a pay range
 Recognizes journey-level full function
 Assumes time in range necessary to acquire job skill
 Associates full job function
 With the median of the market as
incorporated within the pay structure
 With market equivalent pay for average
(successful) job performance
What is a Job Rate?
 May differ from one job to another
 Some jobs require more time to acquire
journey level function than others
 May be set at the 75th percentile
or other point on the pay range
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Associated with the end of longevity
pay progression
Identifies a point in the pay range
to budget against
Pay Progression – Step System
Range
Minimum $
1
Range
Maximum $
2
3
4
5
6
7
8
•
Pay Progression: Typically based on longevity and usually
automatic
•
Steps: Fixed increases
•
Market competitiveness: Determined by comparison of range
minimum and maximum
•
Annual Range Adjustments: Employee salaries automatically
adjusted with range adjustment. Employees remain on step
•
Performance Recognition: Included by awarding additional steps
or withholding an advanced step
Pay Progression – Open Range
Range
Minimum $
Job Rate or
Midpoint
Range
Maximum $
•
Job Rate or Midpoint: Target compensation for competent, “successful”
employees.
•
Progression Above Job Rate: Based on sustained top performance.
•
Job Rate Designation: Range midpoint or other pay philosophy.
•
Job Rate Determination: Level of competitiveness with selected
Market.
•
Minimum & Maximum: Mathematical computation based on Job Rate.
Pay Progression – Combination
Range
Minimum $
1
Job Rate or Midpoint
2
3
4
Develop Skills/Competencies
•
Range
Maximum $
Performance Range
Step area of Range: Assumes a “learning curve”
– Competencies could
– Pay
be established at each step
can skip steps based on demonstrated competencies
•
Job Rate or Midpoint: Assumes competent, “successful”
performance established per philosophy
•
Performance Range: Used for sustained
exemplary performance
Pay the Job or Pay the Person?
 Step systems usually “pay the job”
 Grades generally associate with the work
 Steps reward, on a standard basis, those who do the work
 Is there a need to recognize differing value to the
organization provided by individuals?
 Person-specific recognition can be
incorporated:

Requires creativity and flexibility
Job Rate Pay Management - Why
 Allows for closer tracking of
the value of a job to the market
 Provides greater ability to
budget to a point on the
pay range rather than wait to ID individual salaries
and pay increases
 Provides an identified maximum for employees
who want to simply “do their job” successfully
Job Rate Pay Management – Why?
 Consistent with Pay for Performance
 Allows for differentiation in pay between
journey-level performance & exceptional
performance
 Provides incentives for above standard
performance
 When polled, employees
 Believe that those who are high-performing should be paid
more than those who are “marking time”
 View achieving higher pay than others enhances retention
Job Rate Pay Management – Why?
 Boards and Councils want performance driven
cultures consistent with their private sector
experience
 Attractive to Governance
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Mimics private sector pay models using small increase
budgets of 3% to 5% without use of COLAs
Responds to governing board members
demands for pay management that can be
explained to the public
Job Rate Pay Management – Why?
 Flexibility in pay approaches
 Enhances recruiting & retention for
high performers
 Combined Approach
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Allows for steps up to the job rate while
learning the job
Provides a market competitive pay for
journey-level
Opens up a performance range for “above and beyond”
Job Rate Pay Management – Why Not?
 Requires Change from Tradition
 May require instituting new
administrative policies
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Personnel
Performance Management
Financial and Budgeting
 May require alterations to HRIS
 May require MOU re-openings
Job Rate Pay Management – Why Not?
 Public sector managers and
supervisors operate within “social
units” as well as work units and
may resist differentiating
employees
 Managers may not welcome responsibilities
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Not required when they “signed on”
Requiring an increased level of employee oversight and
evaluation
Job Rate Pay Management – Why Not?
 Public sector employees may
challenge moving to a
“less guaranteed system”
 Employees often believe that
performance-driven pay is unfair with inherent
bias on the part of managers
 Employees may believe that the money will not be
there and will work to defeat such efforts
Job Rate Pay Management – Why Not?
 Requires formal Performance Management
 Public sector organizations
may not be ready to identify
exceptional performance
 Usually requires significant
supervisor training
 Requires discipline/standardization
 Requires top management
sponsorship to promote success
Questions?
-Bruce Lawson, MPA, CCP, IPMA-CP;
bruce_Lawson @ajg.com
-Ronnie Charles, BS, SPHR, GPHR, IPMA-CP
[email protected]
-Sandy Spellman, MPA, IPMA-CP
[email protected]