Q&A with Luis Lewin, VP for Human Resources: Hewitt Total Compensation Assessment (4/7/2010)

Over the next several weeks, Purdue Today, the University’s daily email newsletter, will interview senior administrators about various Sustaining New Synergies (SNS) initiatives that will help meet the University’s budget challenge.

Purdue Today:  Why did the University conduct a total compensation study with Hewitt?
Luis Lewin:  As a result of discussions with the University Senate, we asked Hewitt to update their previous benefits study information and expand it to include total compensation. Total compensation is base salary plus benefits. Also, the study is based on West Lafayette campus total compensation.

PT:  What are the results of the total compensation assessment conducted by Hewitt Associates? 

LL:  Overall, Hewitt’s findings were that total compensation at Purdue is highly competitive. However, some base salaries for exempt staff paid less than $50,000 and for some non-exempt staff paid less than $30,000, are less market competitive than higher-paid staff positions. 

Specifically, the Hewitt assessment found the following when comparing Purdue to the market: 

Category: Overall Base Salary Overall Benefits Overall Total
Faculty 98.6% of market 119.7% of market 103.9% of market
Exempt Staff (salaried,
not eligible for overtime)
95.2% of market 120.5% of market 101.41% of market
Non-Exempt Staff (hourly,
eligible for overtime)
97.1% of market 118.1% of market 102.9% of market

PT:  What do you mean when you talk about “the market”?   

LL:  The market is the group of employers Purdue compares itself against.  For the faculty, we chose 17 Big Ten and comparable higher education institutions.  For the exempt staff, we compared ourselves to eight West Lafayette-area employers.  We chose 10 national and West Lafayette-area employers when comparing our non-exempt staff’s total compensation (see p. 10 of the Hewitt Study).

PT:  How did Hewitt obtain salary and benefit information for the market?

LL:  Faculty pay data was extracted from survey information from the American Association of University Professors (AAUP) and from the College and University Professional Association for Human Resources (CUPA).  Hewitt pulled the staff pay data from CUPA and from Compdata, which is a statewide geographic survey of a variety of employers (large, small, for-profit, non-profit, etc.).   

For benefits, Hewitt took data from its own Benefits Index, a broad, actuarially-valued database of employer benefit information. 

PT:  We know that Purdue’s contribution to the TIAA-CREF retirement plan is generous.  What information does the Hewitt assessment provide about the retirement contributions of other employers in the market? 

LL:  Within the market, the average university contribution to a defined contribution plan, like Purdue’s TIAA-CREF plan, is 9.4 percent of pay.  About 75 percent of universities within the study group require employees to contribute to the retirement plan to receive the full university contribution.  The employee contribution at universities within the study group averages about 5.7 percent of pay. 

We have asked Hewitt to evaluate the impact of the proposed rebalancing of pay and retirement contributions.  This information will be made available in future updates.

PT:   Should Purdue faculty and staff expect changes to compensation and benefits based on this report?  And, if so, when?  

LL:  This assessment is one of many tools the administration is using to develop recommendations to discuss with the Board of Trustees. More details will follow in the future.

PT:   Thank you for your time.

LL:  Thank you.