Understanding Compensation Terms
A job used to make pay comparisons either within the organization or to comparable jobs outside the organization. Pay data for these jobs are readily available in published salary surveys.
A series of defined levels within a job series where the nature of the work is traditionally similar (e.g., accounting) and the levels represent the organization's requirements for increased skill, knowledge and responsibility as the employee moves through a career.
A philosophy adopted by an organization that serves as a compass for the compensation plans and decisions.
As part of the Fair Labor Standards Act (FLSA), exempt employees are those who are not subject to minimum wage or overtime payment provisions. Non-exempt employees are those whose jobs are subject to the overtime pay provisions of the FLSA.
Fair Labor Standards Act (FLSA)
A federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments.
A general description of the job, including work performed and skills, effort, level of responsibility, and working conditions of the work performed. Different from a position description which is personalized for the work an individual is expected to perform.
A group of jobs involving similar types of work, but requiring different levels of skill, effort, responsibility, or working conditions.
The process used by the Compensation & Organizational Effectiveness team to analyze salary rates paid in the market for similar jobs. Market data may be local, regional, national, or international, depending on the type of job.
The rate of pay for a job based on the market data from the salary surveys.
Pay Grade Maximum
This is representative of the 75th percentile of market and is the maximum rate for the duties of a position.
Pay Grade Midpoint
The middle of each pay grade, or 50th percentile, represents typical pay for the duties of a position.
Pay Grade Minimum
This is representative of the 25th percentile of market and is the minimum rate, or entry pay, for the duties of a position.
A description of work for an individual position, often used for annual reviews. Different from a job description which is a general description of the job, including work performed and skills, effort, level of responsibility, and working conditions of the work performed.
Salary surveys are tools used to determine the average compensation paid to employees in a job. A survey consists of compensation information collected from several employers.
Total rewards is not just pay, but benefits, perks, programs, and the work-life balance you have at K-State.
Frequently Asked Questions
Why is K-State moving toward using a market-based compensation program? Isn't a program like this only found in corporations?
Over the past 10 years, many universities have developed and adopted professional, market-based compensation methodologies. Universities have made this transition in an effort to remain competitive with respect to their local communities, other regional institutions, and across national industries. The practice of implementing market-based compensation strategies has moved beyond the corporate world.
Why is it is important to have a consistent methodology for pay practices?
There are several federal and state laws that prohibit pay discrimination. Using a process that is based on market data not only ensures we are competitive in our pay practice, it also supports us an institution that complies with federal and state laws such as the Equal Pay Act.
Why have a philosophy? We were doing just fine without one.
The purpose for having a compensation philosophy is two-fold: (1) to have an anchor and guide for making compensation decisions both now and in the future, and (2) to provide clear, consistent understanding and communication across the entire organization.
How was the compensation philosophy constructed?
We conducted extensive research including comparing philosophies at other universities and colleges. We drafted three philosophies and then conducted a Voice of the Customer process via focus groups. People told us what they liked, didn't like and what resonated with them and what was missing. Using this feedback, we assessed common themes and rewrote the philosophy.
Further, we developed a survey in January 2015 to provide another opportunity for employees to provide feedback (pdf). In total, over 1,000 voices were heard, and the final philosophy was adjusted based on feedback.
What does it mean to adopt a compensation philosophy?
To adopt the compensation philosophy developed at, and for, K-State means many things: from moving towards a total rewards framework to developing and maintaining a compensation system rooted in transparency (e.g., pay guidelines and salary ranges published) to the investment in your future career through the development of job families, career ladders and career paths.
Adopting such a philosophy also means: matching compensation of both internal disciplines and their related programs to external markets and industries, seeking ways to recognize employees beyond monetary awards, and expecting managers to provide employees with feedback and coaching so that each employee can contribute to their full potential.
Job duties and responsibilities
Will there be an opportunity to revise the job analysis questionnaire, if I don't feel that that it is accurate?
No, an opportunity was given to both the employee and supervisor during the JAQ process. Employees had three weeks to review and submit their JAQ to their supervisor.
How were positions and their job duties and responsibilities analyzed?
Human Capital Services collaborated with CBIZ, a third-party neutral organization who also conducted the analysis for all of the KBOR Universities. CBIZ analyzed the K-State workforce using a database of 1,900 surveys across a variety of positions and industries. Positions were matched in the database, based on job responsibilities and duties performed, not a simple title match.
The analysis for all 3,402 positions in the study were based on comparative data from multiple surveys examining the actual duties of each position and where these positions are recruited. As a rule of thumb, executive positions are recruited on a national scale, managerial or professional positions are recruited regionally, and administrative and clerical positions are recruited locally.
The survey database matched the information submitted via the job analysis questionnaire, or JAQ, by job duties. Based on those duties, a position was then assigned a job title. To construct the salary grades, and in honoring K-State's compensation philosophy, the market 50th percentile was used to place that position within a grade, aiming to be near the middle of its respective grade.
I did not complete a job analysis questionnaire. Why, and how, am I placed in Total Rewards?
All active staff—university support and unclassified staff (and who do not hold tenure status)—are included in the Total Rewards study. If no JAQ was on file at the time of position review and placement, Compensation and Organizational Effectiveness utilized the most recent position description on file.
Will my job change as a result of the study? What about my job title?
Your job duties and supervisor will not change. Your job title may change based on the findings during the initiative. Your business title will stay the same unless you and your supervisor agree on a different title.
I share a title with another employee (either in my unit or elsewhere in the university) but the grade assigned is different. Why?
While most positions with comparable titles should be assigned to the same grade, when evaluating positions with similar titles (e.g., director) that span varying disciplines, it is important to consider the primary job duty that each position performs. These duties are then benchmarked to determine the appropriate market rate. After being assigned a market rate the position is then assigned to a grade.
Example: Director of Financial Services compared to Director of Academic Success
The knowledge, skills and abilities, or KSAs, required are different for each position. These KSAs demand different market rates based on how the market represents the pay rate of employees doing similar work in similar industries, even though both hold director titles. Dependent upon the duties that each position performs, either position may be assigned to varying pay grades.
Salary structures, grades and ranges
Why not assign pay grades based on job title?
In order to properly classify a position, Human Capital Services needs to know what the employee's job duties are before we can appropriately determine a job title and the position's respective salary grade. Analysis of positions has a rolling effect: (1) job duties determine market pay, (2) job titles are assigned based on job duties performed, and (3) market pay is assigned to a salary grade. This new system will better ensure alignment of duties and titles, while introducing market pay, salary grades and salary ranges.
Why do Glassdoor and Salary.com report salaries that are different than the salary range for my position?
Salaries reported on websites - including Glassdoor, Salary.com, Payscale.com, Indeed, among others - is collected as voluntary, self-reported data. This data may include inflated salaries and may not reflect a separation of base pay from total rewards. Voluntary compensation surveys may have no quality control, which does not allow compensation professionals to determine potential outliers. Comparing such data is like comparing apples to oranges.
Compensation professionals use reputable salary surveys, generally collected by other compensation professionals across a variety of industries and organizations. These data points represent a wide variety of positions within the market for which K-State competes and are used as reference points when determining salaries at the university.
What is the difference between pay structures A and B?
What do the minimum, midpoint and maximum of a pay grade represent?
The minimum of each pay grade is representative of the 25th percentile of market, while the maximum is representative of the 75th percentile. The middle of each pay grade (50th percentile) represents typical pay for the duties of the position.
Each pay grade is designed to be inclusive of both starting pay and potential progression over time.
What is a job family?
A job family is a group of jobs that perform, or are responsible for, similar types of work. Jobs within a job family typically require similar training, knowledge, skills, and expertise.
During the initial stages of implementing job families, it is important to keep in mind the following:
- some job families include more jobs than others, and those with many jobs may have specialty areas;
- in all cases, a job can only reside in one job family, however, jobs in a job family may not be unique to just one college, department, division, lab, center, etc.;
- assigning jobs to job families will not in any way affect the current grading of jobs (e.g., 06A, 08B) or the pay of individuals.
What job families exist at K-State?
Kansas State University has grouped jobs across all areas of the university into one of the following families.
- Academic Support Services
- Administrative & Managerial
- Administrative Support
- Agriculture & Extension
- Animal Health
- Aviation/Engineering Technology
- Business & Finance Services
- Child & Youth Education Development
- Environmental Health & Safety
- Grants & Contracts
- Human Capital
- Information Technology
- Legal & Compliance
- Mental & Physical Health
- Physical Infrastructure
- Program & Project
- Safety & Security Services
How are job families to be used? What support can they provide?
The job family concept helps Kansas State organize related jobs across all areas of the university. Job families are particularly useful in helping employees determine, evaluate, and develop future career plans—(i.e., career paths).
Knowledge of job families can be used by managers, staff and Human Capital Services to:
- define career development opportunities for staff within a current or another job family;
- facilitate career planning discussions, clarify the need for specific training, and assist staff members who are considering course enrollment and career advancement;
- comply with mandated affirmative action reporting, job applicant tracking, and associated data analysis; and
- allow Compensation and Organizational Effectiveness to use job family information to assist department managers with questions regarding internal equity and/or external competitiveness.
What benefits does the Total Rewards study offer to those employees in range?
Being in range brings many growth opportunities for K-State employees:
- The ability to progress within an established pay range.
- Fully-defined and consistent job titles and pay ranges.
- Internal comparability among similar jobs across K-State regardless of budget size.
- Opportunities to broaden their knowledge or skill base (lateral career movement).
- Ability to view both a potential career (job family) and own their individual career path (career ladder).
- Development of career paths for individual contributors and management roles.
Job and position descriptions
What is a job description?
A job description is a written narrative describing the general function and responsibilities of a position. Job descriptions utilize a common, overarching purpose to describe a position regardless of recruiting department. Job descriptions include job title, job code, salary range, salary structure and grade, minimum qualifications and reporting relationships.
What is a position description?
Position descriptions describe a position at a specific level. Position descriptions utilize specific, focused duties to describe a position. Position descriptions connect the person and the position. Position descriptions include all details of the position, from job title to duties to competencies required for the position.
How does a job description differ from a position description?
Job descriptions and position descriptions differ in their level of detail.
For example, a widget coordinator in veterinary medicine and a widget coordinator in business administration share a job description (similar to that illustrated above). However, a completed position description detailing the specific duties of the position would be used to recruit each position. Position descriptions are then maintained to accurately reflect the duties and responsibilities of each position.
Why have job descriptions if position descriptions provide greater detail of position?
Job descriptions include a general statement of the work performed; are grouped into job families by knowledge, skills and abilities required for similar positions, and serve as a foundation for career ladder development.
Position descriptions include specific job duties and responsibilities, and are used to determine the job title of the position. Position description job duties and responsibilities also are used when administering the Fair Labor Standards Act exemption test.
Market pay and minimum requirements
What is market?
Market represents the pay rate for employees doing similar work in similar industries.
How is market determined for positions that are unique?
All positions are benchmarked using three fundamental labor market factors:
- size of the organization;
- industry influences; and
- geographic influences.
When considering positions that are unique (i.e., those that require niche skill sets), geographic influences are weighted more heavily as this factor is most likely to determine skill gaps. In an effort to attract and retain talent to fill these positions, Kansas State University has two options:
- Recruit top talent away from other industries, while understanding this will cost the university more as a way of rewarding these specialized and/or highly sought after skills. You might pay these employees at a rate greater than market (mid-point) but less than maximum of their salary range (pending relevant work experience).
- Provide current employees the opportunities to develop new, or improved, skill sets that close the gaps for recruitment. This option is less costly to the university while providing promotional opportunities from within.
How are minimum requirements set?
Must I advertise the full pay range? Why?
It is considered compensation best practice to post the full pay range. Not posting the full pay range can create a variety of challenges, including:
- wasting both the applicant's and hiring manager's time,
- discriminating against underrepresented groups as proven by research,
- driving away potential good candidates, and
- starting a relationship off with a lack of trust and transparency.
My department cannot afford to pay salaries equal to the entire pay range. Can I advertise a smaller range?
It is not recommended to post a salary range that differs from an established pay range. Pay ranges are used for both hiring and progression. To establish expectations related to pay, departments can use a pay range hiring disclaimer. The following is a sample disclaimer that may be used in job announcements:
Please note: the minimum salary for this position is $40,000. Actual salary will be determined based on the candidate's experience, education, internal equity and departmental funding. Salary offers are typically made between the minimum and midpoint of the salary range. The range indicated includes both the typical hiring range and potential future progression.
How should pay be managed within a grade?
Pay ranges are inclusive of both starting pay and potential progression over time. Progression is considered to be pay beyond the starting rate, up to the maximum of the assigned grade. Sample guidelines are provided below.
Disclaimer: as the university transitions to the new compensation structure, it will take time to transition all employees to their appropriate placement within the range with respect to the knowledge, skills, abilities, and performance they bring to their position.
Who can use working titles?
All staff (university support staff and unclassified professional staff) are eligible to use working, or business, titles. Employees should partner with their Human Capital Services liaison to review guidelines for using working titles.
Are there guidelines for using working titles?
Yes. Working titles may be used to describe the function of an employee's position in more detail. Guidelines for working titles are available online.
What are the results of a reclassification?
A request for reclassification does not guarantee any particular classification outcome. Following a reclassification review by Compensation and Organizational Effectiveness, the position may increase, decrease or stay the same.
When would a reclassification be appropriate?
A reclassification involves a review process to determine the appropriate job title and pay grade for positions whose job duties and responsibilities have undergone significant changes.
Supervisors should consider the following questions prior to requesting a reclassification:
- Have the duties and/or responsibilities changed?
- Has there been a significant change in complexity or responsibility of the position?
- Is a working title more appropriate to reflect changes in the position?
- Are changes to the position related to an acting or interim appointment?
There are three common actions typically associated with changing a position. Examples of each are provided below.