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UNM Hospitals New Employee Pay Plan Overview and Roll Out January 2004

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UNM Hospitals. New Employee Pay Plan Overview and Roll Out January 2004. What We Will Discuss. Background Of The Project The UNM Hospitals Pay Philosophy New Base Pay Plan The Rollout Plan What’s In It For You As A Leader The Communication Plan Your Role In Communication Questions - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: UNM Hospitals

UNM Hospitals

New Employee Pay PlanOverview and Roll Out

January 2004

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What We Will Discuss

Background Of The Project

The UNM Hospitals Pay Philosophy

New Base Pay Plan

The Rollout Plan What’s In It For You As A Leader

The Communication Plan

Your Role In Communication

Questions

Scenarios

Distribute Communication Tools – Copies Of: New Compensation Philosophy And Compensation Manual

Key Messages/Questions And Answers

This Presentation

Individual Employee Data Sheets

Department Summary Sheets

We know you are anxious to see the “numbers” for yourself and your staff . . .

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What We Will Discuss

Distribute Communication Tools – Copies Of: New Compensation Philosophy And Pay Policies

Key Messages/Questions And Answers

This Presentation

Individual Employee Data Sheets

Department Summary Sheets

. . .You will get the data for your direct reports at the end of our session today. Your manager will get information for your positionIt’s truly important that, for now, you focus on

the information we will be sharing in this session so that you can effectively interpret the data sheets and know what to do with the information. In that regard, we ask that you stay to receive these data sheets and we will commit to keeping this session on track and helpful for you

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Background Of The Project

UNM Hospitals Human Resources performed an assessment of our general and management pay programs over the past several months

As a result of our assessment

We redesigned our general and management pay plans to improve plan administration by:

Assuring development, implementation and utilization of consistent, effective policies related to pay

Developing broader organizational understanding and support for pay decisions

Expanding the databases to assure our competitive position in the relevant talent markets

Improving turnaround in responding to requests for market data and/or new hire pay offers

We developed a base pay philosophy for UNM Hospitals

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The UNM Hospitals Base Pay Philosophy

Our Pay PhilosophyWhat We Are Changing as a Result of this Philosophy

“UNM Hospitals can only meet its mission of care and achieve its strategic goals through the efforts and achievements of its employees.” Therefore, we must:

Reward employees for their performance with base salaries that are market competitive

UNM Hospitals will annually survey the market to ensure that salary ranges remain competitive

Annual pay adjustments will be based on market data for the healthcare industry, other relevant industries, and UNM Hospitals’ annual budgets

UNM Hospitals has redefined the pay process to ensure that pay decisions are: Based on job responsibilities (not

just titles)

Consistent within the organization from one department to the next

Equitable (recognizing employee years of experience1)

Our pay range midpoints are targeted at the 50th percentile of our competitive market

Our new salary structures are based on contemporary and competitive compensation practices

1Years of experience data were gathered up to 25 years; pay adjustments that result from this analysis can only be made for employees below the midpoint of their new pay grade.

Page 6: UNM Hospitals

New Base Pay Plan

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Key Objectives Of The New Base Pay Plan

Ensure base salaries are and remain market competitive

Establish a more consistent and equitable pay platform that ensures pay is based on current responsibilities as well as past experience

Streamline the number of pay ranges and tighten the overly wide range widths to improve administration of the base pay program

Provide pay managers with the structure to make market-based, economically sound pay decisions

Increase understanding of the plan and help managers address pay-related questions and issues

Important! No one will see a reduction in pay as a result of the new program

That said, we are making some equity adjustments (increases) for employees based on their years of experience. However, our budget will only allow us to adjust pay up to the new salary range midpoints. Further detail is provided later in this document

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We Used A Market-Based Method To Develop the New Pay Plan

1 2 3 4 5 6Understand

and Document UNM Hospitals

Desired Pay Philosophy

Identify Competitive Market(s)

Select Benchmark Positions

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Build Pay Structure

Identify Appropriate Incumbent

Placement in New Pay Ranges

A design team consisting of UNM Hospitals Executive Directors, representing various business lines within the organization, provided guidance and input on new pay plans The members of the team are listed on the following page

Towers Perrin, a global human resources consulting firm, was retained to assist in the design and implementation of the new pay plan

Throughout the process, the Human Resources team reviewed each employee file to develop a profile of previous experience for each person

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Design Team

Name TitleBarbara Ohm ED Carrie Tingley Hospital

Cindy Paulsen Benefits Manager

Donna Lockridge ED Primary Care Commentary Outreach

Erin Doles ED Children's Hospital

Glen Jornigan ED Information Systems

Iris Cowles Director of Employee & Labor Relations

Jamie Silva-Steele ED Ambulatory Specialty Clinics/Bus. Ops

Jim Pendergast HR Administration

Judee Harrington ED Diagnostics

Kitty Fleschute AD Patient Financial Services

Mark Kistner ED Facility & Support

Nancy Purtell ED Behavioral Health

Rod Michael Budget Director

Page 10: UNM Hospitals

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Understand and Document UNM Hospitals Desired Pay Philosophy

The design team drafted a preliminary compensation philosophy that:

Defined the competitive market for UNM Hospitals positions

Set a market target for pay that aligns pay for an employee who is mature in his or her job (approximately eight years of relevant experience) with the 50th percentile of the competitive market1 (as defined earlier)

Understandand DocumentUNM Hospitals

DesiredPay

Philosophy

1

1Years of experience data were gathered up to 25 years; pay adjustments that result from this analysis can only be made for employees below the midpoint of their new pay grade.

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Identify Competitive Market(s)

The competitive market may vary from job to job and may include:

Other healthcare systems with similar net operating revenues

Other businesses within the healthcare industry (i.e., clinics)

Other industries within the region with whom UNM Hospitals competes for talent

A “competitive” base salary range has a midpoint that falls at the median (50th percentile) of the market

IdentifyCompetitive

Market(s)

2

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Select Benchmark Positions

The design team selected “benchmark” positions which are defined as jobs that are:

Commonly found in other organizations

Functionally similar to jobs at UNM Hospitals

Generally included in credible published survey sources for which competitive market data can be gathered

In order to assure the validity and reliability of data, approximately 150 benchmark positions were selected that represent:

At least 60% or more of the incumbent staff

An array of pay levels, from highest to lowest

Positions within each job family

SelectBenchmarkPositions

3

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Match Benchmark Positions to Published Survey Data and Analyze Data

Towers Perrin collected data at the 25th, 50th and 75th percentiles of the competitive market for each benchmark position

These data are from credible, reliable published survey sources, i.e.: The surveys are produced by unbiased third party firms that specialize in survey

data collection and tabulation

They include large numbers of participants

They provide job summaries of the jobs in the survey

The survey data can be “cut” several ways to compare by organization size, number of employees, and/or geographic location

MatchBenchmarkPositions toPublished

Survey Dataand Analyze

Data

4

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Match Benchmark Positions to Published Survey Data and Analyze Data (continued)

The design team reviewed the results of the benchmark study to assure accuracy of job match

The following page displays the survey sources used for this analysis

MatchBenchmarkPositions toPublished

Survey Dataand Analyze

Data

4

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Survey SourcesYou’ll note that some survey data are from 2001-2002 as well as 2003

We have taken those data and added an additional 4% per year to bring all the information up to January 2004

This is called “aging” and we’ll talk more about it on the next slide

Hospital & Healthcare Compensation Service/John R. Zabka Associates, Inc.

- Hospital Salary and Benefits Report, 2002-2003

Management Science Association, Inc. (MSA)

- National Survey of Key Professional and Technical Jobs, 2001

Medical Group Management Association

- Management Compensation Survey: 2002 Report based on 2001 Data

Sullivan, Cotter and Associates, Inc.

- Survey of Manager and Executive Compensation in Hospitals and Healthcare Systems, 2001

Towers Perrin

- 2002 Middle Management and Professional Database

Warren Surveys

- The HMO Salary Survey - Spring, 2001

Watson Wyatt Data Services

- ECS Geographic Report on Middle Management Compensation, 2001/2002

- ECS Geographic Report on Office Personnel Compensation, 2001/2002

- ECS Geographic Report on Professional and Scientific Personnel Compensation, 2001/2002

- ECS Geographic Report on Technician and Skilled Trades Personnel Compensation, 2001/2002

- ECS Hospital and Health Care Management Compensation Report, 2001/2002

- ECS Hospital and Health Care Professional, Nursing and Allied Services Personnel Compensation Report, 2001/2002

- ECS Report on IT Personnel Compensation, 2001/2002

- ECS Report on Sales and Marketing Personnel Compensation, 2001/2002

- ECS Report on Top Management Compensation, 2001/2002

William M. Mercer, Incorporated

- Finance, Accounting and Legal Survey 2001

- Human Resource Management Compensation Survey, 2001

- Information Technology Personnel Compensation Survey, 2001

- Integrated Health Networks Compensation Survey, 2001

- Metropolitan Benchmark Compensation Survey - Southeast Region, 2001

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Example: Market Pricing WorksheetUNM Hospitals Market Pricing SpreadsheetLocation: Albuquerque, NM Hospital Scope (Net Revs.): 350 MILLIONUpdate Date: 1/1/2004

Update %: 4.0%

Position Title: ACCOUNTANT II EFF. #, or SURVEY N: PARAMETERS: Region, Size, etc. Average: BASE SALARY ($000) TOTAL CASH ($000)

SOURCE DATE % UPD. P PG. POSITION Co./Inc. (Revenue Dollars in Millions) Scope 25th %ile 50th %ile 75th %ileHospital RevenueECS Hosp Professional Mar-2002 1.0746 P 57 Accountant 177 All Hospitals Rev 150-450mm $255.0 37.7 40.2 44.7 HCs/Zabka Hospital May-2002 1.0676 P III-9 Accountant 319 All Hospitals Rev>150mm na 35.2 39.2 42.9

0.0000Hospital Revenue Average: 36.5 39.7 43.8

Hospital GeographicECS Hosp Professional Mar-2002 1.0746 P 58 Accountant 70 South Central Region $289.0 37.2 39.7 43.9 HCs/Zabka Hospital May-2002 1.0676 P I-11 Accountant 43 South Central Region na 39.6 41.3 50.5

0.0000Hospital Geographic Average: 38.4 40.5 47.2

Clinic

Warren HMO Feb-2001 1.1212 32 Staff Accountant 21 Mountain na 31.9 36.0 40.5 0.0000

Clinic Average: 31.9 36.0 40.5 Home CareHCS/Zabka Homecare Aug-2001 1.0994 III-8 Accountant 9 South Central$5-$10 mm na 39.1 40.4 42.3 HCS/Zabka Homecare Aug-2000 1.1434 III-8 Accountant 9 South Central$5-$10 mm na 38.0 38.8 40.0

0.0000Home Care Average: 38.6 39.6 41.1

Long-Term Care

Long-Term Care Average:General IndustryECS Prof & Sci Mar-2002 1.0746 P 300 Accountant, Level 2 42/184 South Central na 40.9 42.5 44.9

TP MMAPS Mar-2002 1.0746 p 286 Accountant II 18 South Central Region na 41.5 47.0 53.0 Mercer MBC Mar-2002 1.0746 P 1441 Accountant II 122/868 South Central na 39.3 44.1 50.4

General Industry Average: 40.6 44.5 49.4

Overall Average: 38.5 41.6 46.8

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Build Pay Structure

Established preliminary range midpoints for each position

Based on the 50th percentile data This is not average pay These midpoints are market targets — half of the organizations in the

data pay less than the 50th percentile and half pay more By using the 50th percentile for the “middle” of the range, we can

create starting rates that are lower and appropriate to inexperienced new hires and maximum rates that are higher and appropriate for employees who are mature in their jobs1

Build PayStructure

5

1Years of experience data were gathered up to 25 years; pay adjustments that result from this analysis can only be made for employees below the midpoint of their new pay grade.

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Build Pay Structure (continued)

Established preliminary range midpoints for each position

Jobs that have similar salaries at the 50th percentile of the market are clustered into the same range

Their 50th percentile values are then averaged to create a preliminary range midpoint

As the entire structure is built, this average may be modified slightly to create appropriate differences between ranges

Final Midpoint For This Range

$10.45

Job 50th % Pay

X $10.50

Y $10.44

Z $10.38

Average = $10.44

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Build Pay Structure (continued)

Developed pay ranges around the preliminary pay midpoints

UNM Hospitals has 17 pay ranges under the new management base pay plan 24 pay ranges under the new general base pay plan

Build PayStructure

5

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Build Pay Structure (continued)

Developed pay ranges around the preliminary midpoints

As a result of the averaging method and creating a final structure, the midpoints of some jobs are slightly higher or lower than the actual market target of the 50th percentile for that job

A structure that is narrow at the low end and wider at the top allows for:

● A more competitive position for entry level jobs

● More room to grow talent in professional jobs

● The opportunity to compete for

experienced staff

50th Percentile

Midpoint

Differences in midpoints should be

greater than the usual annual salary

increase

Midpoint

Midpoint

5 %

7 %45%

35%

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Build Pay Structure (continued)

Build PayStructure

5

The new pay grade structure is detailed on the following page.

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Build Pay Structure1 (continued)General Salary Structure Management Salary Structure

Salary HOURLY

Grade Minimum Midpoint Maximum

10 $7.28 $8.48 $9.89

11 7.50 9.00 10.50

12 7.96 9.55 11.14

13 8.42 10.10 11.78

14 9.00 10.80 12.60

15 9.67 11.60 13.53

16 10.33 12.40 14.47

17 11.15 13.38 15.60

18 12.08 14.50 16.92

19 13.04 15.65 18.26

20 14.08 16.90 19.72

21 15.31 18.38 21.44

22 16.75 20.10 23.45

23 18.44 22.13 25.81

24 19.88 24.35 28.82

25 21.88 26.80 31.72

26 24.24 29.70 35.16

27 26.48 33.10 39.72

28 29.60 37.00 44.40

29 33.36 41.70 50.04

30 37.40 46.75 56.10

31 41.76 52.20 62.64

32 46.72 58.40 70.08

33 52.28 65.35 78.42

1General and management salary structures are identical except that the management salary grades begin at grade 17 of the general structure. In the payroll system, the general salary grades begin with the letter, “G,” and the management grades begin with the letter, “M.”

Management Salary Structure

Salary Hourly

Grade Minimum Midpoint Maximum

17 $11.15 $13.38 $15.60

18 12.08 14.50 16.92

19 13.04 15.65 18.26

20 14.08 16.90 19.72

21 15.31 18.38 21.44

22 16.75 20.10 23.45

23 18.44 22.13 25.81

24 19.88 24.35 28.82

25 21.88 26.80 31.72

26 24.24 29.70 35.16

27 26.48 33.10 39.72

28 29.60 37.00 44.40

29 33.36 41.70 50.04

30 37.40 46.75 56.10

31 41.76 52.20 62.64

32 46.72 58.40 70.0833 52.28 65.35 78.42

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Build Pay Structure (continued)

Non-benchmark jobs were placed into the new pay structures based on internal evaluation and comparison using the following criteria:

Current pay range

Education/training requirements

Experience requirements

Historic relationships

Level of responsibility

Build PayStructure

5

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Identify Appropriate Incumbent Placement in New Pay Ranges

Human Resources has developed experience data to determine where employees should be placed within their assigned pay ranges (parameters used are described on page 24)

These data were developed from resumes and applications in employee personnel files HR has endeavored to be as accurate as possible You will be asked to review their work

If you think HR has made a significant error in calculation, HR staff will work with you to address the issue

UNM Hospitals will not, however, make changes to the employee files (i.e., have employees provide updated resumes, etc.)

IdentifyAppropriateIncumbent

Placement inNew PayRanges

6

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Identify Appropriate Incumbent Placement in New Pay Ranges (continued)

IdentifyAppropriateIncumbent

Placement inNew PayRanges

6

Entry Level

No experience beyond minimum required

Mature

Approximately 8 years of experience beyond minimum required

Veteran

Minimum Midpoint Maximum

Pay Range for Job1

1Years of experience data were gathered up to 25 years; pay adjustments that result from this analysis can only be made for employees below the midpoint of their new pay grade.

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Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321Build Pay Structure

5Identify

Appropriate Incumbent

Placement in New Pay Ranges

Match Benchmark Positions to Published

Survey Data and Analyze

Data

Select Benchmark Positions

Identify Competitive Market(s)

Understand and Document UNMH Desired

Pay Philosophy

64321

Identify Appropriate Incumbent Placement in New Pay Ranges (continued)

IdentifyAppropriateIncumbent

Placement inNew PayRanges

6

All employees whose pay falls below the new pay range minimums will have their pay adjusted to the new minimums

Within our financial constraints, we will adjust employee pay above the minimum based on experience This is called “decompression” Only some employees’ pay will require adjustment

In this first year, our budget will not allow us to do all the decompression we would like Using the assumption that employees with eight or more years of experience

should be at or near the midpoint of the new salary range, we have spread the available budget as follows . . .

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Identify Appropriate Incumbent Placement in New Pay Ranges (continued) All general and management pay plan employees’ files were evaluated

and their years of experience were calculated using the following parameters: Full-time direct experience at UNM Hospitals or another organization was

counted 1:1 Previous experience must be at least 80% comparable to the current

UNM Hospitals position Full-time indirect experience at UNM Hospitals or another organization was

counted 2:1 Previous experience must be 50%-80% comparable to the current UNM

Hospitals position Relevant experience at UNM Hospitals or another organization (25%-50%

comparable to the current UNM Hospitals position) was counted 4:1 and capped at 1 year

Both part time and casual pool experience at UNM Hospitals or another organization are calculated at half the applicable rate (i.e., if experience is direct, rather than 1:1 it was counted as 2:1)

The minimum years of experience requirement for each job were deducted from the total years of experience calculated

By applying the above parameters, we gathered total experience for each employee

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Identify Appropriate Incumbent Placement in New Pay Ranges (continued)Example:

Perry Towers is a Clinical Analyst who has worked in the position of Clinical Analyst at UNM Hospitals for five (5) years

Perry worked as a Clinical Analyst at Brand X Memorial for two (2) years

Prior to that, Perry was a Staff RN at Brand X for three (3) years

The minimum requirements for a Clinical Analyst at UNM Hospitals are:

At least 1 year of experience as a clinical analyst

At least two years of experience as a clinical professional (RN, Med Tech)

Perry has 7 years of direct experience as a Clinical Analyst. One year of this experience “opened the door” along with his prior experience as an RN

Therefore Perry is credited with 6 years of experience (7-1)

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Identify Appropriate Incumbent Placement in New Pay Ranges (continued) Total years of experience were gathered up to 25 years

We knew going into the project that we would have to limit decompression at some level of experience, so we erred on the side of gathering more rather than less experience data

We prepared several cost models using the experience data

We were only able to employ a model that adjusts to the midpoint of the new ranges for 8 years of experience

This methodology is consistent with market practice

It assures that all staff with at least 8 years of experience are at the median of the market or better

No methodology can totally eliminate compression

All organizations have limits to what they can pay – maximums of the pay ranges

If one employee has 30 years of experience and another has 35 years, they both may have reached the maximum

No pay plan can ever truly recognize loyalty – we as managers need to send messages that affirm our appreciation for employees’ efforts but acknowledge the limits we have for rewarding people through cash

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Identify Appropriate Incumbent Placement in New Pay Ranges (continued) Using the calculated years of experience, incumbents were then placed

appropriately in their respective salary grade

Costs were then determined using the incumbent’s current pay relative to their new salary grade and where, in that salary grade, they should be placed relative to the following parameters:

Everyone is brought to the minimum of their grade

4 years to the 1st quartile

Another 4 years to the midpoint (total = 8 years)

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Identify Appropriate Incumbent Placement in New Pay Ranges (continued) In year 1, the budget available for UNM Hospitals to implement the new

plans ($519,000) was first used to bring all of the incumbents below the minimum of their salary grade to the new salary grade minimum. After all of the incumbents were brought to the minimum, the

remaining amount was divided equally among all of those incumbents who were below the midpoint of their grade and needed an adjustment based on experience (unless the increase needed is less than or equal to $0.05).1

For example: If $100,000 was available and the true cost to decompress to the midpoint was $400,000, 1/4th (25%) is available. An incumbent requires $.60 per hour to be fully decompressed. In year one, we can get 1/4th of the way providing the incumbent $.15.

In year 2, the same method will be used as in year 1, except that there will be no cost to minimum and the salary structure will be updated in order to keep it competitive with market practice.

In year 3, the salary structure will be updated again, and UNM Hospitals will complete the transition.

1Years of experience data were gathered up to 25 years; pay adjustments that result from this analysis can only be made for employees below the midpoint of their new pay grade.

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The Rollout Plan

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What’s In It For You As A Leader?

New base pay structures that are consistent across the organization and competitive in the market

Training for pay managers to help you effectively administer the new pay plan and make pay decisions

Open communications about UNM Hospitals’ pay plan

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Communication Plan

January 16All UNM Hospitals’ leadership will see this overview and be provided information specific to their staff

January 26 – February 6Pay managers meet one-on-one with employees to present the new plan

February 6Pay day with pay changes

February 6 - 20HR available to address any necessary changes

January 16 – 23 Leaders review data/correct

January 18Grade and pay changes effective

FebruaryJanuary

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Your Role Help ensure a successful implementation by:

Providing feedback today and throughout the process

Supporting this process with your employees Conduct one-on-one meetings (beginning next week) with General and

Management pay plan employees who report to you in order to communicate the new pay plan

Answer your employee’s questions using the scenario information we will provide you with in a few minutes

Share the employee’s profile sheet with the employee

Allowing the employee to keep the white copy

Having the employee sign the yellow copy (indicating only that they have seen it) and then return the yellow copy to Human Resources for placement in the employee’s personnel file

Keeping HR informed of employee feedback throughout the process

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Your Role (continued) Work with HR to make future pay decisions and maintain the new program

The new philosophy and compensation manual will help guide this effort

Participate in the scenario sessions after this presentation part of the program

Schedule one-on-one meetings with your employees

Use the communications tools you will be provided

New Compensation Philosophy And Compensation Manual

Key Messages/Questions And Answers

This Presentation