Compensation and rewards
Managers should consider the following classified pay factors in applying pay practices. Employees must meet acceptable job performance levels (“contributor” or higher ratings) to receive any management-initiated salary increases.
After considering all classified pay factors, managers should determine which factors are most applicable for each compensation situation. This strategic process should take place before beginning any salary discussions with current employees or job applicants.
No one factor should be used exclusively to determine pay (i.e., applicant’s current salary). Additionally, pay should not be perceived as a fixed amount (i.e., 10 percent above the candidate’s/incumbent’s current salary). Situations will occur in which the negotiated salary is less than, the same as or more than the candidate’s/incumbent’s current or most relevant salary.
Job pay factors
Agency business need
This includes the specific activities and organizational, financial and human resource requirements that derive directly from the agency’s mission. For example, changes in an employee’s duties, responsibilities and abilities should relate to agency business need in order to be compensable.
Managers should focus on the significance and impact of the position/employee on the organizational unit, department and/or university and will want to answer the following questions on the pay action worksheet:
- What is the most valuable contribution this position/candidate will make in helping the organizational unit meet the university’s mission and goals?
- What would be the organizational consequence if this candidate were not hired (or increase is not granted)? How significant is this consequence to the overall operations of the university?
- Explain what makes this candidate a good selection. What education and experience, KSAs and competencies were evident on the application, in the interview and from references?
Duties and responsibilities
This includes the primary and essential work functions performed by an employee or group of employees. Variation in these duties and responsibilities helps to distinguish one employee from another for comparison purposes.
In eJobs on the PAW tab, you may need to summarize what change in duties has occurred.
Employee pay factors
This includes the previous and/or current work accomplishments or outcomes and behavioral interactions that typically form the basis of written, verbal or observational assessments of an incumbent or candidate.
Employees must meet acceptable job performance levels (“contributor” or higher ratings) to receive management-initiated salary increases.
Work experience and education
This includes the relevant employment history and academic qualifications of an incumbent or candidate.
- Work experience is the employment history of an individual (i.e., job titles held and corresponding descriptions of duties, responsibilities, and tasks performed).
- Education includes earned academic credentials (i.e., high school diploma, associate degree, bachelor’s degree or specific advanced degree).
On the PAW tab in eJobs, you may want to answer the following questions:
- How readily available in the marketplace are the qualifications you are seeking?
- Are there unique qualifications the candidate/employee possesses that may enhance the organizational unit’s ability to meet the university’s mission and goals?
Knowledge, skills, abilities and competencies
This includes elements commonly listed for job requirements, hiring qualifications or employee credentials.
- Knowledge refers to acquired principles and practices related to a particular job (i.e., principles of nuclear physics or accounting).
- Skills refer to acquired psychomotor behaviors (i.e., operation of forklift or personal computer).
- Abilities include talents, observable behaviors or acquired dexterity (i.e., ability to lift 200 pounds).
- Competencies include knowledge, skills and underlying behaviors that correlate with successful job performance.
Training, certification and license
This includes job requirements or employee qualifications that are relevant or highly desirable for a particular job.
- Training refers to a specialized course of instruction outside the realm of recognized academic degree programs (i.e., in-service training).
- Certification refers to a specialized course of study resulting in a certificate upon successful completion (i.e., cardiopulmonary resuscitation, certified professional accountant or emergency medical technician).
- A license is a required credential to practice one’s occupation (i.e., registered nurse, pharmacist or physician).
Internal salary alignment
This is a fairness criterion that takes into consideration the proximity of one employee’s salary to the salaries of others who have comparable levels of training and experience; similar duties and responsibilities; each employee’s performance; and similar knowledge, skills, abilities and competencies.
To determine internal salary alignment, examine an employee’s salary in relation to comparable coworkers’ salaries. Your HR consultant can share information about employees performing similar jobs within the university.
On the PAW tab in eJobs, you may want to address how the employee’s/candidate’s qualifications rank among current comparable employees.
Note that discussions of internal alignment issues should focus on employees performing similar duties. You need to address the following on the PAW tab in eJobs:
- Describe the rank-order of positions that are being used as alignment reference points.
- Describe the relative differences in such factors as experience, performance and skills.
This is the present base pay compensation of a current employee or job applicant. Examples of base pay compensation include an hourly wage or a weekly, semi-monthly, monthly or annual salary.
This factor typically does not include shift differentials, benefits, overtime, incentive premiums, bonuses, commissions or other similar non-base-pay compensation.
- For applicants who are moving from out of the area, cost-of-living may be a strong factor. For example an accountant from Northern Virginia may make significantly higher salary than an accountant here in Richmond. The U.S. Department of Labor provides help in calculating these costs.
- Is the candidate’s current job (current salary) relevant and related to the job for which he/she has applied?
- Is the candidate’s related job exempt or non-exempt (i.e., she/he may be eligible or ineligible for overtime pay)?
Market pay factors
This includes the relative availability of suitable, qualified employees in the general labor market, which is subject to the effects of supply and demand. The agency should consider its tolerance for variation in the applicant pool and its willingness to accept applicants with fewer qualifications in times of high market demand. On the PAW tab in eJobs, answer the following questions:
- How long has this position been vacant? How long have you been recruiting for the position?
- What different recruitment strategies were used?
Salary reference data
This is a composite of relevant salary information extracted from available surveys that indicates market pricing for various jobs in Virginia. Examples of relevant salary information include average salary range, median salary and weighted average salary.
HR consultants have access to salary survey data and can provide departments with relevant information.
On the PAW tab in eJobs, consider the following:
- What specific survey data were considered in making the salary pay decisions?
- How competitive must you be to hire and retain a qualified candidate in this position?
This includes all forms of cash compensation (i.e., base pay, shift differentials, overtime, on-call pay, bonuses and commissions) and the dollar value of the employer-sponsored benefit package (i.e., health and dental insurance, long- and short-term disability, paid leave, retirement and life insurance).
The greatest impact of total compensation will focus on starting pay and competitive offers.
- Are there additional benefits and/or compensation (i.e., paid leave, overtime, shift differential) that the candidate will be receiving with the state benefits package?
- Consider VCU’s additional benefits, such as professional development, tuition waiver, work/life resources and discounts that may be attractive to the candidate.
Financial pay factors
This includes the financial consequences of pay decisions and how the agency manages its salary dollars.
Address the significance and impact of the position/employee on the organizational unit, department and/or university.
- How much salary has been budgeted for this position?
- If the starting pay for this candidate is higher than what has been budgeted, how will the difference be funded this year and in subsequent years?
- Consider the impact the salary decision will have on the budget and the alignment within the work unit/department. Pay practices allow for increases later in employment through the use of in-band adjustments and role changes as an employee’s KSAs and competencies increase and s/he takes on higher-level responsibilities. The initial job offer is not the only opportunity to get an employee appropriately compensated.
This includes the strategic and financial outcome of anticipated future salary costs, staffing changes, salary alignment among employees, career growth and salary reference data changes.