Determining the appropriate salary or wage to pay employees
How much money should you pay a new employee? How much of an increase should you give someone who is being promoted? How do you know your salary offer is appropriate and legally defensible?
Most employers want to be confident that their salary offers are enough to attract qualified candidates without overpaying. Below are some tips for making good salary decisions.
In general Purdueï¿½s salary administration has been and continues to be focused on internal equity ï¿½ how the pay for one position compares with pay for other similar positions at Purdue. This is particularly evident in the procedures governing clerical and service wage determinations.
Clerical and service wage determinations
When considering how much to pay clerical and service hires, supervisors can look to the University pay scales and to the wage determination limitations outlined on the Compensation Web site.
For new hires, the Compensation Web site indicates that employees in these classifications must be paid at least the minimum for the job level and may not be paid more than the lowest-paid person in the same job title and level who is not in the provisional period and who has a satisfactory performance record. While exceptions to this process are made occasionally, the requests must be made in writing and must include a full explanation of why a higher level of pay is being requested. It is important to remember that requests for higher pay should not be based on qualifications the employee holds that are not required in the position; for example, it is inappropriate to request higher pay because an employee has a bachelorï¿½s degree when the position does not require a degree.
For lateral transfers (same level to same level, regardless of job title) there is no adjustment in pay.
For promotions, the employee must be paid at least the minimum of the higher level. A five percent raise is customary for most promotions within the clerical and service ranks.
For downward classification, pay is generally not reduced unless documented performance issues are involved.
These limitations may result in unexpected situations. For instance, an internal job applicant may be interviewed for a position at the same level as the applicantï¿½s current position. An external applicant may also be interviewed. The internal applicant cannot receive a pay adjustment upon hire, but the external applicant could be offered any salary from the minimum of the range up to the wage of the lowest paid person in the range. If there are no other employees in the range, the department may offer the external candidate up to the maximum of the range.
While this maintains the focus on equity among internal jobholders, it does permit the possibility of salary disparities to be introduced as individuals from the outside are hired.
How should you determine the appropriate salary in this situation? The best advice at this time is to keep in mind that the Universityï¿½s primary consideration is equity. As a supervisor, you should understand who is paid how much in your unit, and you should strive to maintain equity as much as possible among similar positions. Your compensation analyst can provide you with salary analysis of positions in your unit and across the University to help you make a good salary determination. If youï¿½re not sure who your analyst is, please call 49-40097 for assistance.
Administrative and professional salary determinations
The picture becomes more complicated with administrative and professional positions. A number of factors contribute to the complexity. Purdue has no officially established pay ranges for these positions, and few strict guidelines are in practice for the administration of salaries for A/P staff. In addition, titles are not controlled for A/P positions as they are for those in the C/S ranks, so it can be difficult to identify similar positions for salary comparison. To further complicate matters, some departments have more funds than others to devote to labor costs, so similar positions are sometimes paid differently across the University.
What can you as a supervisor do to make sure your salary decisions are appropriate? Follow a few standard practices related to A/P salaries. Historically, promotional increases have been limited to around 10%, although there are circumstances where larger increases are appropriate. All salary offers of $100,000 or greater for administrative and professional positions within the academic areas must be reviewed and approved by the Provostï¿½s office.
When developing a new position or posting an existing position, it is important to discuss your proposed salary range with your compensation analyst before the job posts.
Part of determining the appropriate salary range is being aware of what other people in your department are paid. Consider whether or not you have similar positions in your department. What was the most recent hire into a similar position paid? Why was that salary offered? For an internal hire, consider the salary history, if available. Is your position a lateral move, higher, or lower than the applicantï¿½s current position?
Your analyst can also provide information and analysis from a variety of other sources. The analyst has access to salary information about similar positions throughout the University and can provide analysis of the factors affecting the pay of internal employees working in comparable jobs. When there is a need for additional information, analysts have access to salary survey data and can obtain salary information from other institutions.
By working with your analyst before the job is posted to determine the correct salary range, the rest of the employment process goes more smoothly. Recruiters screen out applicants on the basis of their salary requirements, so having the salary range identified upfront reduces time spent on candidates who will not be interested when the range is finally disclosed. In addition, determining the range before posting eliminates any delays in securing necessary approvals before making job offers.
If you have questions, call your compensation analyst at 49-40097.
- Comp and Classification Team
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LeadingEdition is an electronic newsletter for Purdue University supervisors. It is produced and distributed by Purdue University Human Resources four times annually. If you have questions, comments or suggestions relating to the newsletter, please call 49-41679 or email us. Thank you.