Methods for Establishing and Maintaining an Equitable Salary Structure

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Title:
Methods for Establishing and Maintaining an Equitable Salary Structure
Series Title:
ARL-ACRL Human Resources Symposium
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Presentation slides
Language:
English
Creator:
Keith, Brian W.
Publisher:
George A. Smathers Libraries, University of Florida
Place of Publication:
Gainesville, FL
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Source Institution:
University of Florida
Holding Location:
University of Florida
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Applicable rights reserved.
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AA00013202:00001


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Methods for Establishing and Maintaining an Equitable Salary Structure

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Note: Slides with links, handouts and spreadsheets with calculations are available at http :// ufdc.ufl.edu/AA00013202

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The objectives of compensation programs are: Recruitment Retention Equity Reward desired behavior Control costs Comply with legal regulations Further administrative efficiency Duda Prologue

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This session 1. Key Concepts Equity/Fairness Salary Plan Design (Elements and Terminology)

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This session 2. Experiences at the UF Libraries Decisions and policies establishing and maintaining faculty and staff salary structures

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This session 2. Experiences at the UF Libraries Why? Illustrate the above concepts in practice Depict decisions, processes and outcomes Resulting system is transparent and maintainable, and modular and customizable -transferable

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This session 3. References 4. An invitation to continue this discussion

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Concepts

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Equity and Fairness Equity External Internal Individual Personal Fairness Distributive Procedural Terpstra, Honoree

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Forms of Equity External In comparison to similar jobs in other organizations Internal In comparison of different types of jobs in one organization Terpstra, Honoree

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Forms of Equity Individual In comparison of performance of individuals working in the same type of job in the same organization Personal worth Terpstra, Honoree

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Fairness Types Distributive Perceived equity of the pay received by employees Procedural Perceived equity of the decision making processes and procedures used to distribute pay Terpstra, Honoree

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Fairness and Equity Research has generally found Procedural Fairness is most important for employee pay satisfaction. Individual Equity is the second most important. Terpstra, Honoree

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Fairness Types Procedural Fairness (continued) Strongly influences whether employees view the organization and management as trustworthy and valuing them. Terpstra, Honoree

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Fairness Types Procedural Fairness (continued) Increased through: Consistency Design participation Good communication practices R edress opportunities Terpstra, Honoree

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Salary Administration

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Salary Administration Three fundamental issues for pay policies: (1) setting pay levels in relation to other companies (2) evaluating individual jobs and determining pay relationships among them; and (3) determining pay relationships among individual workers within the same job. Personick

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Salary Administration These issues are addressed through effective Salary Structures

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What is a Salary Structure? System where jobs of roughly equal value or worth are grouped into grades with competitive salary ranges. Note: One employer may have multiple models or approaches within this structure. Singer, Francisco

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Why establish a structure? Compensation decisions made solely to pacify employees inevitably produce higher operating costs and create an environment that rewards complaints rather than performance. Whittlesey, Maurer

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Why establish a structure? Individualized compensation arrangements rarely go unnoticed by other employees, despite usually cause some rancor within the employee group. Whittlesey, Maurer

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Why establish a structure? By establishing compensation guidelines based on current market norms before recruiting for a position, employers can balance: and Whittlesey, Maurer

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Why establish a structure? Even though they may be responsible for managing costs, most managers strive to provide their employees with the highest suffer directly from the increased cost and they Whittlesey, Maurer

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Why establish a structure? When individual managers make decisions regarding subordinate compensation, every unit is likely to receive dissimilar pay for similar tasks. Whittlesey, Maurer

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Why establish a structure? Provides : Organizational consistency Reference for career development and predicting pay increases Both of which serve the objectives from the Prologue. Whittlesey, Maurer

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How do you develop a Salary Structure? Through Compensable Factors and Pay Ranges Personick

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Compensable Factors Definition: Any job attribute that provides a basis for determining the worth of the job. Singer, Francisco

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Compensable Factors Employee based examples : Education/training Experience Certification/licenses Singer, Francisco

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Compensable Factors Job based examples : Customer relations/service Communications/ key interactions/ level of contact Supervisory responsibility Supervision received Job Complexity Problem solving Decision making (authority and impact) Working conditions Responsibility for assets Singer, Francisco

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Compensable Factors Their use requires decisions regarding: w eights degrees or levels Singer, Francisco

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Pay Range Definition: The minimum to the maximum base rate of pay for employees in the same or similar job Often expressed pay grades Singer, Francisco

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Range Width Definition: Percentage difference from the minimum to the maximum of a pay range Vary, but typically narrower for lower pay grades Rate minimums should attract qualified job candidates while rate maximums should be set to reward and retain high achievers Singer, Francisco

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Range Progression Definition: The difference, or jump, from one grade to the next Vary by position type, but typically smaller for lower pay grades. Should be large enough to reflect progressive increases in compensable elements of the positions grouped together. Singer, Francisco

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Range Midpoint Used to orient salary levels for example, the more highly rated or the most experienced employees are above the midpoint Generally, for white collar workers, the midpoint represents a job's market value. Personick

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Salary Structural Integrity A company that has invested time and effort in designing an equitable, competitive program must be willing to adhere to it, or there really is no program at all. Whittlesey, Maurer

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Salary Structural Integrity Achieved through policies for Recruiting Counter Offers Promotions Lateral Moves Merit and ATB Increases

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Concepts And

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Employee Population Faculty 84 Staff 169 Students and OPS 164 Total 417 UF Orientation

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Library Staff (Benefitted) 118 Others IT 22 Non IT 28 UF Orientation

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Library Faculty 9 month 3 Adjunct/Visiting 2 12 Month 79 Total 84 UF Orientation

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Library Faculty Ranks Assistant IN 2 Assistant UL 23 Associate IN 3 Associate UL 38 UL 15 UF Orientation

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Library Staff (1) Others IT (2) Non IT (3) Library Faculty Deans (4) Chairs and Associate Chairs (5) All others (6) Students and OPS (7) UF Libraries Salary Systems

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Library Staff (1) Others IT Non IT Library Faculty Deans Chairs and Associate Chairs All others (2) Students and OPS UF Libraries Salary Systems

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Salary Systems Library STAFF

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Initial Concerns & Issues Comparison to prevailing wage Pay rates did not reflect technical qualities of positions or professional credentials of employees Existing classification structure and its administration were flawed Salary Systems Library STAFF

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Issues: Classification Structure LTA and Archivist classifications were: inadequately defined not appropriate for the majority classified as Archivist Did not depict a hierarchy: Sr v. LTA Supervisors Salary Systems Library STAFF

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Issues: Classification Structure Program Assistant and Coordinator classifications had been utilized by a variety of library departments as library specific duties. Salary Systems Library STAFF

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Issues: Classification Structure Salary adjustments for promotions, demotions and lateral moves were inconsistent. Inconsistent rates used for recruitment. Salary Systems Library STAFF

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Improving Classifications 2006 Staff Structure Reorganization Committee was charged Proposed new series of Library Assistant and Associate classifications Produced Classification Descriptions and Examples of Duties Salary Systems Library STAFF

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2007 UF staff Performance Management Initiative was launched All staff Position Descriptions were reviewed and updated that spring Submitted electronically and posted online Salary Systems Library STAFF

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Review of Library Positions Each were compared to the Classification Descriptions and Examples of Duties, by Supervisor and employee Unit Department, and Division Salary Systems Library STAFF

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Classifications Each position was mapped to the appropriate Library Assistant or Library Associate classification. Salary Systems Library STAFF

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Classifications All mapping recommendations put forth by the divisions were reviewed by the Library Deans to ensure positions were mapped equitably and consistently across the different divisions of the libraries. Salary Systems Library STAFF

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Salary Systems Library STAFF Mapped Classification Original # Library Assistant I MOTOR VEHICLE OPR 1 LIBRARY TECHNICAL AST 3 Library Assistant II SECRETARY, SR 1 LIBRARY TECHNICAL AST 9 LIBRARY TECHNICAL AST, SR 16 Library Assistant III LIBRARY TECHNICAL AST 3 LIBRARY TECHNICAL AST, SR 28 Library Associate I ARCHIVIST, SR 1 LIBRARY TECHNICAL AST 1 LIBRARY TECHNICAL AST SPV 1 LIBRARY TECHNICAL AST, SR 1 PROGRAM AST 2 ARCHIVIST 14 Library Associate II COMPUTER APPLICATIONS, CRD 2 1 LIBRARY TECHNICAL AST SPV 2 LIBRARY TECHNICAL AST, SR 3 PROGRAM AST 3 ARCHIVIST 4 ARCHIVIST, SR 7 ACADEMIC SUPP SVCS, CRD 1 8 Library Associate III ARCHIVIST 1 COMPUTER APPLICATIONS, CRD 2 1 ACADEMIC SUPP SVCS, CRD 1 8

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UF Implementing Classifications Each position was reclassified to the appropriate Library Assistant or Library Associate classification. Salary Systems Library STAFF

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UF Implementing Classifications Job vacancies for positions with primarily library specific job duties are all posted as Library Assistant or Library Associate positions Salary Systems Library STAFF

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UF Job Groupings Salary Structure Salary Systems Library STAFF

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Establishing Salary Structure Selected the 2006 ALA APA Salary Survey (Non MLS, Public and Academic) Salary Systems Library STAFF

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Establish Ranges: width, midpoint, and progression Determined the target minimum, mean and maximum salaries for each of the new Library Assistant and Library Associate classifications. Salary Systems Library STAFF Sunday, Pfunter

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UF 2007 Salary Structure Salary Systems Library STAFF Classification Minimum Average Maximum Library Assistant I $20,581 $24,213 $27,845 Library Assistant II $22,639 $26,634 $30,629 Library Assistant III $24,903 $29,298 $33,692 Library Associate I $27,393 $32,227 $37,062 Library Associate II $30,133 $35,450 $40,768 Library Associate III $33,146 $38,995 $44,845

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Now what? How do we create a distribution of wages for a population from an old (imperfect) system to a completely new staff classification structure? Salary Systems Library STAFF

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Answer: Compensable Factors Salary Systems Library STAFF

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Compensable Factors Selected and Education They were given equal weight Salary Systems Library STAFF

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Defined Levels Salary Systems Library STAFF Education Level (1 7) Degree 1 HS 2 AA/AS 3 BA/BS 4 Masters 5 MLS 6 MLS and Additional Masters 7 PhD

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Collected data for each employee Salary Systems Library STAFF Education Level (1 7) Degree 1 HS 2 AA/AS 3 BA/BS 4 Masters 5 MLS 6 MLS and Additional Masters 7 PhD Education Level Years of Experience Mean 2.9 11.74 Median 3 10

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Compensable Factors The relative weight of the levels (degrees) for both of the compensable factors was established. Salary Systems Library STAFF

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The average level of each compensable factor was assigned a weight of 1.0. Salary Systems Library STAFF Years of Experience Modifier 0 2 0.85 3 5 0.9 6 8 0.95 9 11 1.0 12 15 1.05 16 20 1.1 21+ 1.15 Education Level Modifier 0.85 1 0.9 2 0.95 3 1.0 4 1.05 5 1.1 6 7 1.15

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Calculations The education and relevant professional experience were averaged to arrive at an overall compensable factor for that employee. Salary Systems Library STAFF

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Calculations This average was applied to the targeted salary midpoint for the classification to which Salary Systems Library STAFF

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Calculations The resulting wage was the target individual wage (above, at or below the midpoint for the range). Salary Systems Library STAFF

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Clear enough? Salary Systems Library STAFF

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How about an example? See: Example of the Application of Compensable Factors Salary Systems Library STAFF

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Outcome Salaries for employees in comparable positions are distributed, in a consistent manner, around a common midpoint oriented to the external market Salary Systems Library STAFF

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Outcome 104 of the 119 employees whose positions were mapped to Library Assistant or Library Associate classifications were targeted for a salary increase Salary Systems Library STAFF

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Implemented in 2007 (April and October) Salary Systems STAFF

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Maintenance Effective 09/19/08, staff employees at UF received a 2% across the board pay increase Midpoint targets for the Library Assistant and Associate classifications were increased by 2%. Salary Systems STAFF

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Maintenance Effective 07/01/10, staff employees at UF who met certain criteria received an across the board (ATB) pay increase equivalent to 1% of their annualized salaries They also were eligible for merit increases. Midpoint targets for the Library Assistant and Associate classifications were increased by 1 %. Salary Systems STAFF

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Maintenance Effective 09/16/11 staff employees at UF received an ATB increase of 3% to help offset a legislative change that required employees to contribute 3% toward their retirement benefits Midpoint targets for the Library Assistant and Associate classifications were increased by 3% to reflect this event. Salary Systems STAFF

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Salary Structure From implementation to present the salary structure has been adhered to for offers, promotions, and other career events for staff (Using the same method as the example) ( See George A. Smathers Libraries Staff Base Salaries ) Salary Systems STAFF

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Salary Structure Delivers: salary discipline and consistency Promotions and demotions Recruitment (internal and external) Needs: Regular ATB raises to sustain (external equity) Merit to differentiate based on performance and credentialing (internal equity) Salary Systems STAFF

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Faculty, All others Salary Systems Faculty

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Issues Compression Ad hoc salary decisions based (inconsistently) upon rank assumptions of job worth and market demand Lack of transparency Salary Systems Faculty

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Joint Committee formed in 2008 Charge: Establish a market equity design with an internally and externally equitable salary structure Final report submitted March 2009 Salary Systems Faculty

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Joint Committee Findings: Association of Research Libraries (ARL) Salary Survey is a serviceable external measure Salary Systems Faculty

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Joint Committee Findings: ARL US, public university libraries constitute a suitable representation of institutions Salary Systems Faculty

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Joint Committee Findings: job types are the most reasonable basis for external linkage Salary Systems Faculty

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Joint Committee Findings: Applying locally defined compensable factors allows for internal equity Advanced degrees held in addition to the MLS, which are applicable to the job assignment A limited number of faculty positions require uncommon skills, such as foreign language fluency Salary Systems Faculty

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Joint Committee Findings: Salaries should reflect differences in librarian rank and length of service 12 15 years of service represented the midpoint of the distribution for ARL data and, with the UF rank of Associate UL, Salary Systems Faculty

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Joint Committee Findings: Performance is an important component of an equitable salary structure Salary Systems Faculty

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Establishing a Faculty Salary Structure Next turn at bat: Library Administration Salary Systems Faculty

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ARL Salary Survey My Take Comprehensive Broad participation among ARL HR officers, including UF institutions Salary Systems Faculty

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ARL Salary Survey My Take Large data pool offers higher validity Includes position specific data can assume HR Officers would likely interpret definitions similarly Salary Systems Faculty

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ARL Salary Survey My Take Updated annually Joint committee used 08 09 Implementation based on 09 10 Includes data from law and medical libraries Salary Systems Faculty

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ARL Salary Survey My Take Plus the data is accessible Salary Systems Faculty

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ARL Salary Survey My Take reference for ARL institutions Salary Systems Faculty

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ARL Salary Survey My Take Challenges Tables are numerous but statistics and tables are limited for our purposes This requires the deriving of data Salary Systems Faculty http://publications.arl.org/ARL Annual Salary Survey 2009%E2%80%932010/

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ARL Salary Survey My Take Challenges Definitions codes Subject Specialist primarily build collections, but may also offer specialized reference and bibliographic services Reference librarians both general and specialized Public Services non supervisory, except reference librarians Salary Systems Faculty http:// publications.arl.org/ARL Annual Salary Survey 2009%E2%80%932010/

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ARL Salary Survey Analysis Salary Systems Faculty

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ARL Salary Survey Analysis Reminder: ALL calculations used in UF Faculty Market Equity are reflected in the spreadsheet posted at http:// ufdc.ufl.edu/AA00013202 Note: There you can also find a primer on weighted averages Salary Systems Faculty

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ARL Salary Survey Tables of Interest Table 25: average salaries by position and geographic region Table 26: average salaries of US librarians by position and years of experience Figure 5: average salaries for Functional Specialists Table 20: average salaries by position and years of experience Salary Systems Faculty http://publications.arl.org/ARL Annual Salary Survey 2009%E2%80%932010/

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ARL Salary Survey Analysis Comparison of Regions Note: Derived from Table 25 positions See Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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ARL Salary Survey Analysis Calculation of average salaries for subject specialist, reference, and public services; and catalogers and technical services Note : Derived from Table 26 Ref Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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ARL Salary Survey Analysis Average salaries for functional specialist provided in Figure 5 Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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ARL Salary Survey Analysis Establish years of experience and job type midpoints Note: Derived from Table 26 Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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Findings 1. Variations exist between, regions and type of entity (public v. private) 2. Years of experience is a stable predictor of salary Salary Systems Faculty

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Findings 3. Medical positions would be addressed with ARL numbers (versus MLA) Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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Findings 4. Average salaries vary significantly by job type Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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Decisions necessary to create a Faculty Salary Structure Salary Systems Faculty

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Decisions: Relevant Market We would use South Atlantic, Public and Private Applying a factor of .9383 to national averages Salary Systems Faculty

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Decisions: specific to each faculty member based upon Position specific factors Individual specific factors (e.g. experience) Salary Systems Faculty

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Decisions: Position Groupings We would merge Subject Specialist, Salary Systems Faculty

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Decisions: Stipends for department chairs and associate chairs excluded from the base salary calculations Salary Systems Faculty See: Stipend for Smathers Libraries

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Decisions: Salary specific to each faculty member based upon 1. Position specific factors Job Type Language : Adjust up 9 %, if foreign language required for position Salary Systems Faculty

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Decisions: Salary specific to each faculty member based upon 2. Individual specific compensable factors: Rank : Adjust up or down, from Associate, by 9% for Assistant UL and UL Length of Service: Adjust up or down for applicable experience above or below ARL average Salary Systems Faculty

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See: resulting Faculty Salary Structure Salary Systems Faculty

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Implications: Faculty in similar job types form peer groups (position groupings) Other factors will differentiate their actual salaries (compensable factors) Salary Systems Faculty

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Decisions: Salary specific to each faculty member based upon 2. Individual specific compensable factors (continued) : Advanced Degrees: Adjust up for additional relevant advanced degrees (maximum of $5,000) Performance : Adjust up to retain effect of 2010 merit increases Salary Systems Faculty

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Decisions regarding Performance and Eligibility: Cap all raises at 18% Cap evaluation) in primary responsibility in either of the past 2 years Exclude in either of the past 2 years Does not preclude the ability to apply for individual market equity evaluations Salary Systems Faculty

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Application See Salary Systems Faculty http://ufdc.ufl.edu/AA00013202

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Communication See : Salary Systems Faculty

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To summarize: Salary Systems Faculty

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1. External equity based on: Job type (Midpoint for ranges) Geographic region (Application of ATB Factor) Salary Systems Faculty

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2. Internal equity based on: Years of experience (with UF Ranks imposed) Special requirements of the position SKA (Language ) Administrative (Stipends ) Educational credentials Performance (inclusion of past merit & qualifiers) Salary Systems Faculty

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Results Total eligible: 76 faculty 49 (64%) targeted to receive raise 19 ( 25%) already at or above market equity 8 ( 11%) do not meet minimum requirement Salary Systems Faculty

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Results Of the 49 targeted to receive raise 7 faculty capped at 18% 7 faculty capped at 9% Salary Systems Faculty

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Maintenance: See: Salary Systems Faculty

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REFERENCE Terpstra D., & Honoree, A. (2003, November). The Relative Importance of External, Internal, Individual and Procedural Equity to Pay Satisfaction: Procedural Equity May be More Important to Employees Than Organizations Believe, Compensation & Benefits Review 35 (6), 67 74. Singer, P. M., & Francisco, L. L. (2009). Developing a compensation plan for your library Chicago: American Library Association. Romanoff, K., Boehm, K., & Benson, E. (1986, December). Pay Equity: Internal and External Considerations. Compensation & Benefits Review 18 (6), 17 25. Bloom, M. (2004). The Ethics of Compensation Systems. Journal of Business Ethics, 52 (2), 149 152 Duda, F. (1989, Summer) Developing Compensation Systems in Academic Libraries. Library Trends 38 (1), 103 126 Personick, M. (1984, December). White Collar Pay Determination under Range of Rate Systems, Monthly Labor Review 107, (12), 25 30 Whittlesey, Z., & Maurer, C. (1993, July). Ten common compensation mistakes, Compensation and Benefits Review 25 (4), 44 48 Sunday, K., & Pfuntner, J. (2008). How widely do wages vary within jobs in the same establishment? Monthly Labor Review, 131(2), 17 50.

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Invitation: For further discussion, please contact me at bwkeith@ufl.edu or 352 273 2600

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Methods for Establishing and Maintaining an Equitable Salary Structure THANK YOU!