M Compensation & Salary Policy 2008

Management Forum PresentationNovember 3, 2008

Lynne Gervais, Associate Vice-Principal Human Resources

1

BackgroundM group vital to McGill’s operations, key

player in growth and development of McGill as a World Class Institution

Desire to align Human Resource practices with “Best Practices”.

Commitment made to management and professional staff in December 2007 to review the current M Compensation framework

2

Main IssuesCurrent M salary structure not systematically

benchmarked since the implementation of the Pay Equity Program in 2002

Current structure lacks flexibility to adapt to market conditions for attraction and retention of key talent

Pay scales are narrow; salary progression is slow and a promotion is needed in order to obtain a significant salary increase

Does not allow for sufficient recognition of individual contribution

No clear market reference point to validate competitiveness

3

4

Current Benchmark Excercise Two (2) consulting companies were selected to conduct this benchmarking exercise:

Normandin-Beaudry : Mercer, Watson Wyatt, Hewitt

The Hay Group

Role Profiles Surveyed Market Reference Type of Survey

1. SAF (4 role profiles) G13 Universities + Concordia University + 4 main English CEGEPS (Dawson, Vanier, John Abbott, Champlain)

Closed

2. All other job families (17 role profiles)

LOG, FIN, PER, COM, ADM, IST

All industries + Not for profit

Standard published surveys- Greater Montreal data, National data- Non profit, National data all industries

ConclusionsLevels 1 & 2 (grades 5 & below)

McGill’s salaries are overall competitive

Levels 3 & 4 (grades 6 & above)

McGill’s salaries are generally less competitive

SAF positions:

The maxima of McGill’s current salary scale is in line with the median salary of our reference market ;

Actual salaries are on average 5% lower than market median

Note:

This study was conducted only on base salaries, and does not take into account the other components of the total rewards (benefits, holidays, etc.) offering of the University

5

6

Way Forward- Best Practices

7

Best Practices :Salary Benchmarks Current Practice Going Forward

Para Public & Public Sectors primarily Yet we recruit from a range

of sectors including Private Industry

Local Markets- Montreal Yet we occasionally recruit

within the Province and other provinces in Canada

Internal Equity focus Yet best practices indicate

focus should be both external & internal

Private Industry data in addition to Public and Para Public

Based on Local & National reference Market

Focus on external market as well as internal references

8

Wider ranges for each grade; allows for:

Growth in the role; Increased complexity, scope;Correct positioning of roles based on

market.Target Pay as a main reference point

Based on the market;Slope Increase

Between all grades;Recognizes the complexity of roles

Best practices: Salary Scale

9

Movement in Salary Ranges

Capacity to pay

Growth in the role

Acquiring additional competencies, skills, qualifications

Achieving/exceeding objectives;

Greater impact on the institution

Unusual market pressure – example, retention of hot skills i.e. C.A.’s now, IT during Y2K

Revised M Salary Structure

10

What changes?Now Effective December 1

2 reference points : Minimum and Maximum;

Market reference point not clear

Single Zone: Min Max

Narrow scales- little or no room to move ; pay compression; red circle situations resulting in lump sum payments.

Linear slope between pay grades

11

Introduction of Target Pay as main reference point for competitive pay. Based on McGill Competitive market .

Three Zones Min Target Max Zone 1, Zone 2, Zone

3

Increase in the difference between min & max to provide more movement within each salary range at all levels.

Increasing slope between target pay points to reflect increasing complexity

12

Current Structure

2 3 4 5 6 7 8 9 10 11$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

$130,000

$140,000

$150,000

Grade

13

New Structure

2 3 4 5 6 7 8 9 10 11$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

$130,000

$140,000

$150,000

$160,000

$170,000

$180,000

$190,000

$200,000

Zone 3Zone 2Zone 1Target

Grade

New Salary Scale

14

Level Grade Zone 1 Zone 2 Zone 3 Market Median

Min Mid Max

1 34,900$ 43,600$ 52,200$ 2 38,400$ 48,000$ 57,700$ 47,000$ 3 42,200$ 52,800$ 63,400$ 4 46,500$ 58,100$ 75,500$ 58,000$ 5 51,100$ 63,900$ 83,100$ 6 53,900$ 71,900$ 93,500$ 7 60,700$ 80,900$ 105,200$ 78,000$ 8 68,300$ 91,000$ 118,300$ 9 76,800$ 102,400$ 143,400$ 10 86,400$ 115,200$ 161,300$ 110,000$ 11 97,200$ 129,600$ 181,400$

2

3

4

1

15

New incumbents..

Recent promotion…

Acquiring new skills…

Meeting most requirements

Meets all requirements…

Sustained achievements…

Possesses key competencies, both technical and behavioral

Significantly exceeds requirements consistently…

Possesses high demand skills…

Recognized as an expert in their field

Zone 2 – Target (95-110%)Zone 1 Development/Transition Zone 3- Exception

$Min

$$$Job Max

Salary ManagementThe range associated with each grade is divided into three zones

Target

100%

The division of each grade into 3 zones provides increased flexibility and enables the University to place a fair value on the competencies, responsibilities and contribution of each employee

16

OutcomesEnsure McGill’s competitive salary positioning

on the broader reference market

Reinforce the link between contribution and rewards

Support employee growth & development

Foster accountability/ownership at local managerial level

Next StepsDevelop competency framework for each job

family Technical competencies & behavioral competencies

for each role in each job family

Review current salary policies and define specific criteria for moving within and between the ranges in new structure

Develop specific merit guidelines to support the implementation of the salary policy

17

3-year Salary Policy

18

19

McGill vs. Market practiceTotal Budgets (2002/2007)

Salary Freeze in 1995 Catch-up exercise begun in 2001 New “M” Compensation Structure implemented in 2002

Actual

Year 2002 2003 2004 2005 2006 2007 2008

CPI 2.2% 2.8% 1.8% 2.2% 2.0% 2.2% ????

Market Avg. Increase* 3.5% to 4% 3.5% to 4% 3.5% 3.5% 3.5% 3.5% 3.5%

McGill Budget 5% ** 4.5% 4.5% 4.5% 4.5% 2.5% 3.0%

* Source: Conference Board of Canada. Aggregate national & local (Québec) data for all industries, as well as public, para-public and not-for-profit organizations.

Average increase = overall increase budget, including scale increase, across the board, progressions, merit.

** 2002 included the 2nd and final phases of a catch-up exercise begun in 2001 to compensate for freezes and lower budgets in previous years.

Note: The University uses the annual CPI of previous December as a reference when determining salary policy

Approved Budgets- 3 Year Salary Policy2008: 3%

2% minimum increase for all employees meeting requirements of job

1% additional budget given to each unit to recognize leading performance

2009: 3% 1% minimum increase for all employees meeting requirements of

job 2% additional budget given to each unit to recognize leading

performance

2010: 3.5% % of minimum increase and performance increase to be defined

20

21

Performance levelsPerformance Categories—4 levels

LEVEL OF PERFORMANCE MINIMUM INCREASE

1. Leading 2% +

2. Strong 2%-3%

3. Building Consistency 0-2%

4. Immediate Improvement Required 0%

22

Performance Definitions Leading   Consistently outstanding performance exceeds expectations

Strong

Solid performance and consistently meets job requirements

Building Consistency

Performance does not consistently meet job requirements

  Requires Immediate Improvement

Performance consistently fails to meet job requirements

 

 

23

Questions / Comments