Salary Adjustment FAQs
What is market and compression adjustment?
When you are notified of your raise, typically everyone gets the same
percentage across-the-board raise, but in many cases there will be a raise for
other factors: market, performance, compression, and/or promotion. Here we're
talking about the market and compression components. The contract typically
allocates a small percentage of each year's raise to market and/or compression
adjustments. Market adjustments are intended to bring salaries up towards
national averages for each discipline, and so are allocated according to how
far faculty fall behind national averages for their rank and discipline.
Compression adjustments are intended to deal with cases where salaries of more
recent hires or of lower rank have risen close to the salary of someone of
higher rank or who has been here for a longer time, for reasons that cannot be
attributed to performance differences.
Briefly, how is it decided who
gets market raises, and how much they get? [top]
The point is not to make salaries the same, but to make them rational.
So, once negotiations with the Administration produce a contract with
percentages targeted at market and compression adjustments, the task is to identify
systematic patterns of below-average salaries and use systematic means to bring
them up towards national averages, without getting into questions of individual
performance. This is done by measuring how far behind national averages each
rank in each department is for their field, comparing departmental averages to
national data. For all faculty except Extension and
Library, this data comes from an annual survey conducted at Oklahoma State
University. (The data is from
everywhere in the US, not just Oklahoma, but the survey is referred to as OSU.)
Extension data comes from the USDA's
"Salary Analyses of Cooperative Extension Service Positions" and Library
data comes from the ARL Annual
Salary Survey. We also use a procedure to adjust averages if others in
their rank and department have especially high salaries.
There has never been enough money allocated by the negotiated contract to
get everyone up to national averages, so procedures have to be developed to
distribute what limited amount we have. Basically, average salaries for each
rank within each department are compared to OSU averages, and the amount of
money it would take to bring people in that rank up to national averages is
determined. (Because of the nature of the data, Library is treated as one
department, and Extension faculty are distinguished by
highest degree and field vs. campus instead of academic discipline.) Next, we
see how much money there is that can be devoted towards that difference: in
FY11, for example, we had enough to make up 21% of the gap between a
department's salaries and national averages; in FY07, it was 33%; in FY09, it
was 10%. In FY11, therefore, eligible ranks and departments thus received a
market raise equal to 21% of the amount they were behind OSU averages, up to
the cap (which was $2,600 in FY09, the maximum allowed by the contract ratified
in Sept. 2008). The money is spread out in proportion to salary, so people with
higher salaries in a given rank/department get a slightly
higher market adjustments.
Since
its first contract with the Administration, UA has followed a consistent
approach, made up of three goals and four principles. The goals
are:
- Bring
all faculty at least up to national averages at
comparable institutions for their rank and discipline. This will improve
UVM’s ability to attract and retain high-quality faculty. We
currently are far behind in many units (but not all).
- Close
the gap over a period of years, giving more funds to groups more behind
national averages at comparable institutions.
- Conduct
the analysis for groups made up of all faculty in
a rank and department, rather than for individuals. Differences in
salaries within ranks and departments might reflect performance adjustments
over time. It is not our intent to reverse these judgments, but to deal
with a structural problem affecting the whole faculty.
It
is constructed according to the following principles:
- Years
in rank: Make the system sensitive to the length of time a
faculty member has been in rank. A full professor who was tenured last
year should be treated differently from someone who has been a full
professor for 20 years.
- Caps: Cap
maximum adjustments at a fixed rate. (In FY11, we capped at the maximum
allowed by the contract, $2,600.)
- Compression: Focus
compression adjustments on contract-caused compression (instead of, say,
compression caused by what might be a "star" faculty member,
which gets into questions of performance.) The most common kind of contract-caused
compression in the past has come from the effect of salary minima in the
first contract, which automatically bumped up the salaries of newer hires
in lower-paid departments to levels close to those of their colleagues who
had been in rank for many years; compression adjustments were allocated to
try to maintain salary distinctions in those departments. In recent years, the entire pool has been
allocated to market, rather than compression, adjustments.
- Outliers: A few
academic departments have one faculty member with an extremely high or low
salary (at least 1.5 standard deviations away from the mean for the
department-rank). These outliers
are excluded from the market comparisons, so as to not give one anomalous
salary influence over the rest of the department’s market adjustments.
I want more details of how this works. [top]
OK, here's
a step-by-step overview:
Step
1: Get data. Whenever it is time to conduct the
market and compression analysis, the UA Salary Committee gets data about UVM
faculty salaries and national salaries from the Administration and conducts an
analysis using a spreadsheet. A database of current salaries broken up by
department and rank is constructed. (It includes Chair salaries, because these
are included in the OSU data.)
Step
2: Adjust for years-in-rank. UVM
department/rank salaries are adjusted for years in rank, and an average salary
is determined "as-if-average-years-in-rank." If all the associate
professors in a department were newly tenured, for example, the adjusted
average salary for that department would be higher than the actual average
salary; if all the associate professors had been in rank for 12 years, the
adjusted salary would be lower than the actual average. One would expect
newer faculty members to be paid less than those who had been in rank for many
years; the adjustment thus allows for more of an apples-to-apples comparison
with national data. The years-adjusted salary level is the estimate of the salary
for that group if faculty members had an average number of years in rank. Based
on a regression analysis by Prof. Elaine McCrate, we
assume that a year in rank at UVM typically returns one percent of a gross
9-month salary.
Step
3: Identify and correct for outliers.
There are a few cases in which relatively high salaries of some faculty members
might raise the average of a category to prevent others in their group from
getting market adjustments, even though all the others are substantially below
average. In other cases, one extremely low salary could benefit other members
of the group whose salaries are not markedly low. We delineated these cases by using the
spreadsheet to flag individuals that were more than 1.5 standard deviations
away from the mean in their department/ranks. In these cases, we could recompute the department/rank average by assuming that the
highly paid faculty was paid at one standard deviation from the national average.
This way, adjustments are not disproportionately affected by one outlying
salary.
Step
4: Develop a dollar number. Use the
calculations already developed to determine a dollar amount by how much each
dept./rank category is behind the national averages of
our comparison schools. This varies a lot from department to department and
rank to rank.
Step
5: Determine what percentage of the gap can be met. The contract specifies a certain percentage of the overall
raise that can be given to compression and market; this is a specific amount of
money (in FY11, for example, when the market/compression component was 1%, just
over $435K was available for General Fund faculty, and just over $15K for Extension
faculty). At this point, the Salary
Committee must determine what our salary target should be, which in recent years has ranged from 103% to 106% of the OSU national
average. The Committee also decides on
where to set the salary adjustment cap (in FY11 it was set at the maximum
allowable $2,600), and based on these parameters, we set the percent of the gap
that can be adjusted with the pool of funds available.
Step
6: Assign adjustments. The
spreadsheet then assigns adjustments to each faculty member accordingly.
Adjustments are capped at $2,600, and a minimum is set at $200 (so that if the
calculated adjustment is below $200, the spreadsheet adjusts up to $200).
Adjustments within a rank/category group are slightly adjusted according to an
individual's salary, to preserve distinctions within a rank/dept. group.
Finally, adjustments are multiplied by an individual's FTE; a person who is due
a $200 adjustment and has a .50 FTE appointment, for example, would get $100.
Who thought
all this up? What's the history of the market adjustment?
The techniques of market adjustment are almost entirely the work of Prof.
Ross Thomson, who was United Academics' Vice President and who served as chief
negotiator for our last contract. In the
1990s, the Arts and Science's Dean's office sought ways to start bringing
faculty up towards national standards in an even-handed, rational way. Prof.
Ross Thomson, who was then an A&S Associate Dean, began developing
spreadsheet-based mathematical comparative measures that could systematically
measure how far particular people were behind and allocate market raises
accordingly. When United Academics signed its first contract, Prof. Thomson was
involved in the Executive Committee, and so he was able to take the methods he
had developed in A&S, refine them, and apply them to all faculty
in the bargaining unit.
How is it decided what group of
schools we compare ourselves to determine what's average? Can this change? [top]
There is no scientifically perfect way to determine our
comparison group. On the one hand, there are practical limitations. For example,
we compete with mid-sized private universities for students and faculty and are
in many ways a quasi-private university, but data broken down by discipline is
not available for them, and so we cannot include them. On the other hand,
because this is about shaping salary structure in the future, choosing a list
of competitors is as much a matter of future direction as it is about current
conditions; it is about who we want to be as much as it is about who we are. So
part of how we determine a comparison group is to make it consistent and
supportive of the UVM Vision, and the stated goals of President Fogel to make UVM "the premier small public research
university in the country."
While in the past we have used 100% of OSU as the
target for comparison, OSU includes schools that
are clearly not our competitors such as Cleveland State. When we
were far behind, this was a serviceable practice, but as we slowly creep
towards national averages, the presence of
schools that are clearly not our competitors in the database might have
excluded faculty from getting market adjustments when they are well behind
their national markets. Our first effort was to come up with a more precise measure
of how we should define market averages, but we were not able to reach an
agreement with the Administration about an appropriate comparison group. As an
alternative, for FY07 we used 103% of OSU as a rough approximation of our true
market; in FY08 we used 105% and in FY09 106%.
We will be talking to the Administration in the coming years
to develop procedures for dealing with this in the future.
Why do lower-paid people sometimes
get less market adjustment than people who are paid more? [top]
Again, the goal of the market adjustment is rationality and competitiveness,
not equality in pay. So a number of circumstances can sometimes lead to market
raises being higher for higher paid faculty. For example, a person in a field
that is poorly paid nationally may get a small market adjustment while someone
in a highly paid field who makes much more will get a larger one.
Similarly, a number of full professors at UVM are farther behind national averages
than their junior colleagues, so even though as fulls they are paid more already, they also sometimes get
larger market adjustments. Also, the market adjustment method is
designed to bring rank/dept. groups up towards averages, while preserving
existing differences within those rank/dept. groups. If each faculty
member in a rank/dept. group, (e.g., all associate professors in Dept. X) got
the exact same market adjustment, differences between these faculty
might decline over time. (Other factors in the contract can narrow the relative
gap, including minima, promotion increases, and flat dollar amounts for
performance adjustments.) The market adjustment method, therefore, is designed
so that within each group, those with higher salaries get slightly higher adjustments
than those with lower salaries. (The formula is: Individual's base pay divided
by average base pay, and then multiplied by amount behind national average.)
The contract does include money to reward performance in FY011, and requires
that faculty get substantial, specified raises upon promotion. Market
adjustments intend to solve a different problem: that whole
groups of high-performing faculty are behind national averages. The idea
of the market adjustment system is not to make everyone paid the same. It is to
make the salary system rational. It is thus designed to preserve performance distinctions
within a department/rank category. It operates from the assumption, though,
that the cause of low salaries at UVM is not just that most of the faculty are not worthy; some effort to bring the entire
faculty up to national averages is warranted.
It is worth mentioning that United Academics supports the
principles of performance and peer review, and has in a variety of ways worked
hard to protect professionalism and high scholarly standards. The contract also
allows Chairs and Deans to grant raises "for the purpose of matching or
exceeding bona fide written offers from other institutions, adjusting for
anomalously low salaries or for rewarding professional contributions to the
University of an extraordinary nature."
My colleague makes a lot
more money than I and has been working here for about the same time. It's not
fair. Can the union fix that?
Market adjustments aim to solve a structural problem, that salaries for whole
groups are too low, either because the whole group lags behind national norms
or because incoming faculty are paid more than faculty in the same department
who have been employed for a longer time. Our goal of transparency and
objectivity requires that we use uniform formulae. This will not address past
differences in salaries, whether fair or not. By our procedure, faculty know that salary decisions treat each faculty by the
same principles and so are fair and clear. Over time the overall faculty salary
structure at UVM will gradually move in the direction of being less ad hoc,
more rational, and closer to national averages than it has been in the past.
Professionals
in my field make much more money than I do; my students go on to make more
money than me after a few short years of work. Can't the Union do something
about this? [top]
The union works hard to improve the salary situation at UVM in general, and as
part of a national movement, we are working to protect and improve the status
of academics overall. But for the purposes of market adjustment, the
"market" we compare ourselves to is other academics at research
universities, not to professionals working outside academia.
How do the Union’s procedures change
over time, and can I help shape them?
The
Union’s procedures respond to real problems, and do change over time. We
introduced years in rank in the calculations because of input from union
members. We are now considering whether the entire OSU study is the appropriate
comparison for UVM faculty, or if some group of more comparable institutions
might work better. Likewise, we have worked with Library and Extension faculty
to determine the best procedures for market adjustments in their units. We
welcome input to improve the adjustment process, and those interested in serving
on the Salary Committee in the future should contact Jenn
Strickler.
Other members of the Salary Committee for FY11 were David Novak,
Assistant Professor of Business; Sheila Weaver, Senior Lecturer in Mathematics
and Statistics; and Karla Karstens, Senior Lecturer
in Mathematics and Statistics.
Who do I contact if I have questions
or concerns about market and compression adjustments?
The
current Chair of the Salary Committee is Jenn Strickler, Jennifer.Strickler@uvm.edu.