We help IT Professionals succeed at work.

needing help in calculating expected pay increase

GMartin
GMartin used Ask the Experts™
on
Hello and Good Evening Everyone,

Recently, Middle Tennessee State University decided to provide salary enhancements for its employees.   This decision was made as an effort to address the gap between actual employee salaries and market salaries as reported by CUPA for 2014-15.   The link to https://www.mtsu.edu/hrs/compensation/docs/Market_Adjustments.pdf provides a couple of examples of how the raises are calculated.  However, the example calculations are complex with no attempt given to explaining where some of the numbers actually come from.  For example, how is the minimum and midpoint range determined?  Is there a site that lists these values based upon the individual's skill level and years of experience?  Here is an example scenario of interest that is in need of determining any salary adjustment.

        John Doe at Pay Grade 2 with 17 years of MTSU experience
       Current Salary --- $24,179.23

I can not list the Minimum and Midpoint Range because I do not know where these values really come from.  That said, could someone possibly track down the source for determining this information?  I am assuming the Pay Grade Scale is located somewhere within the mtsu.edu site, but, I am uncertain.   Or, perhaps it comes from the CUPA statistics for 2014-15.  

Any suggestions or tips for filling in the gaps so the numbers can be plugged into the calculations as shown in the examples given within the link of https://www.mtsu.edu/hrs/compensation/docs/Market_Adjustments.pdf will be greatly appreciated.  

Thank you

George
Comment
Watch Question

Do more with

Expert Office
EXPERT OFFICE® is a registered trademark of EXPERTS EXCHANGE®
Mechanical Engineer
Most Valuable Expert 2013
Top Expert 2013
Commented:
I worked for two employers with similar salary administration programs.

The way it worked at those employers, every salaried position from entry-level clerk to CEO was assigned a numeric pay grade from 1 to 50. The assignment was based on study of the position description and was occasionally audited by an outside consultant for consistency with HR salary administration practice at other regional employers. So you might have a PhD Chemist supervising an analytical laboratory in the same pay grade 43 as a Sales Manager and an Engineer VII.

Each pay grade had a minimum and maximum salary. These minimum and maximum. salaries were adjusted annually to make sure that wages were competitive with other regional employers. Since the comparison data was a year or more old at that point, the pay ranges lagged behind other employers during periods of high inflation.

The HR Department pays for salary survey data from several sources within the region. The data are anonymized, so you don't know which companies supplied inputs. It may be compared to national data with an adjustment factor that takes your region into account. This data is regarded by HR as being far superior to any salary survey data you might have access to from professional societies or trade publications. Any data you can get your hands on will be completely ignored by HR. Their data includes wages for all employees of the companies participating in the survey. In contrast, the professional societies and trade publications rely on self-reported data, and there will be additional bias towards higher wages because better performing employees are more likely to join a professional society.

The maximum salary might be 140 to 150% of the minimum salary for a given pay grade. And the difference between the minimum salary for one pay grade and the next higher one might be 10 to 15%.

Where I worked, an employee might be hired into one pay grade, and move into a higher pay grade as they gained experience. For example, you might change from Engineer I to Engineer II after two years. There was no bump in salary for that progression, but it did mean that your ceiling was higher.

Raises were given annually, and were based on your performance evaluation and penetration into the range of your pay grade. Highest percentage raises were given to outstanding performers earning at or below the minimum for their pay grade. People earning near the top of their pay grade might get small percentage raises (less than inflation rate) even when their performance had been very good or outstanding for many years.

If you were promoted, your new title and position description was posted on the office bulletin board. There was typically a small raise associated with the promotion plus a pro-rata raise based on the number of months since your last raise.

If employees stayed with the company for a long time, it wasn't unusual for them to be earning close to the maximum for their position. If you started as a clerk typist, then became a departmental secretary and finally an executive secretary--after 30 years of employment you were maxed out.
                                       ___________________________________________

If I apply my experience to what I read on the MTSU market adjustments document, your pay grade is assigned by HR based on your position description compared to jobs at other regional employers. It's pretty much non-negotiable. The minimum and maximum salaries for each pay grade (also non-negotiable) are determined by HR working with an independent salary administration consultant and multiple regional salary surveys. The supporting data is kept secret. Employees are just told the minimum and maximum salary for their pay grade.

My guess is that MTSU is looking at compensation surveys for public and private universities in Tennessee and Kentucky. They may also look at compensation surveys for a broader selection of employer types in the greater Nashville area. They might even have one that is specific to Murfreesboro. Trust me--they have the data, but you won't ever be able to see it.

The specific calculation used by MTSU is:
New salary = MIN(Midpoint of pay grade, minimum salary + (years of MTSU experience) * (salary midpoint - salary minimum )/15)

The expectation appears to be that the average employee has 12.9 years of MTSU experience. This corresponds to 43% penetration into the pay grade.

What can you do if the new salary isn't enough? This is a classic problem, because the employer always wants to minimize salary expense, yet needs to stay competitive with other employers in the region.

One strategy is to look for a position within MTSU that has a higher pay grade. HR should be able to make some suggestions for the types of job titles to look for.

The other strategy is to find a job elsewhere. Murfreesboro has a diverse economy. If the MTSU pay grades are valid, you should be able to earn a maximum of 20 to 25% more at the new employer (though you are unlikely to get that full amount as a new hire). Between the hospital, city and county government, Nissan, and General Mills, you have a lot of big employers to look at. Or maybe you could get into the music business with Bonnaroo.
What questions do you have about the pay chart at the bottom of that pdf file you posted?

Author

Commented:
Hello and Good Morning Nick,

           I am sorry for not being more specific with my question.  Basically, I am wondering what the minimum and midpoint range is for a Pay Grade 2 staff employee with 17 years of experience at MTSU using the pdf file posted.   I thought there might be a simple chart to go by for determining this information so I can plug it into the calculations given within this pdf file.  

            Thank you

            George
Hi George,

I'm working on what may be a formula and i'll try to get to it tonight or tomorrow. If byundt has satisfactorily given you the answer you seek then go ahead and close the question. Comments can be made even after questions are closed.
byundtMechanical Engineer
Most Valuable Expert 2013
Top Expert 2013
Commented:
George,
You'll need to get the minimum and midpoint for a Pay Grade 2 staff employee from your HR Department. That information will not be on the web.

I was gobsmacked to see that the HR Department released the table showing Pay Grade 1 through 11 minimums and midpoints to anybody. Where I worked, that would never have happened because it would allow employees to know how much other people were being paid.

Brad
I'm trying to track down the source of a number in the charts. There is a source..........
byundtMechanical Engineer
Most Valuable Expert 2013
Top Expert 2013

Commented:
If you don't mind investing $170 for a CUPA-HR annual report that may or may not be the exact figures used at your institution: https://www.cupahr.org/surveys/results/pricing-and-ordering/
Both examples use a range penetration factor that is shown in the two tables at the bottom. Both examples use level 5 (grade 5) and neither chart refers to length of service. But the calculations do use the length of employment.

Example one uses 3 years and the penetration rate factor for grade 5 - classified salary
Example two uses 21 years and the penetration rate factor for grade 5 - administrative salary.

You would choose which chart matches your position.

Example one they multiply 3 (3 years) x the penetration rate for grade 5 classified which is $402.60 in their calculation of expected pay raise.
Example two they multiply 21 (21 years) x the penetration rate for a grade 5 administrative which is $726.67.

Range penetration is how far you are into the wage range.

And don't forget the top where it calculates "funded at 43%"
Take the minimum of the range and add 1/30th of the range for each year of experience, etc.

--------------------------------------------------------------------------------------------------------
Here are comments on the calculations.

Someone who had penetrated at a 100% level would be at the maximum top and anyone with 10% penetration would be 10% above the minimum bottom.  Here are two excerpts from various other definitions, which all say the same thing in different ways:

An individual's pay compared to the complete pay range. Range Penetration = (Pay - Range Minimum)/(Range Maximum -Range Minimum).

Range penetration (or salary range percentile) expresses the job holder's rate of pay in reference to the entire pay/salary grade. It's calculated by subtracting the range minimum from the employee's salary, and dividing the result by the difference between the range maximum and the range minimum.

For example, assume that your employee's salary is $50,000.

Assume the Salary Range is:

Minimum      Midpoint      Maximum
$44,000      $55,000      $66,000
The formula for Range Penetration ("RP") is:

RP=       Salary - Range Minimum
Range Maximum - Range Minimum
In this example:

$50,000 - $44,000
$66,000 - $44,000       = 0.27 (or 27%)
Range penetration or salary range percentile can be useful if your organization uses portions of the pay range as "targets" or control points.

https://apps.worldatwork.org/community/discussions/discuss.jsp?did=47116&tid=47116&frm=sr
-----------------------------------------------------
Note the last sentence which references your employer's use or non use of portions of the pay range as "targets."

And at the bottom of that page you see this comment:
Salary ranges are our 'best swag' of the market value of specific work; minimums and maximums vary based upon an organization's philosophy, and range penetration is a function of those parameters (however they've been established).  That is one piece of the equation.

The other part of the puzzle is how to compensate individual contributors within those grade structures and in comparison to their colleagues...many ways to do this, with the goal of getting/keeping/rewarding individuals appropriately.

So no there is no table where you insert numbers. But you should be able to use the 17 years experience to calculate predicted salary. But you need the penetration rate factor and the tables from your link do have those for grade 2.

I'm sorry I was unable to find a simple answer and solution.

Author

Commented:
Hello and Good Afternoon Everyone,

          With respect to the question asked, I am afraid the answer is not easily made available online using charts and tables as originally thought.  However, I do sincerely thank you both for taking the time to offer thorough and detailed feedback.  

           On a side note, I did contact the HR Department of MTSU.  Apparently, the decision regarding the increased amount, if any, of the full-time employees is voted upon by a formal committee (TBR), passed down to the VP of Business and Finance for determination of the amounts, and further passed down to the department heads for needed adjustments for said amounts.  At least, this is my understanding of what was said.  

             With respect to a time table, eligible pay raises will become active during  January.   The exact details will be forthcoming during that month.  

             Thanks again for taking the time to share your thoughts about this question :-)

             George
Thank you George.