New Pay Plan Placement: The Public Experience

Most public, pay plans seek to maximize simplicity and equality by utilizing discrete categories or levels and regular movement based on predetermined increments. On the rare occasion that plans change, experience demonstrates that most operate under the same parameters as those described above. Given these concerns, placement typically corresponds with the rules utilized for movement in the ranges. In other words, placement becomes an exercise in “truing up” or ensuring that the past rules remain in effect after implementation of new ranges.

Given that most pay plans reward experience and education, allocation based on this combination represents the most common method of placement. In order to demonstrate the frequency of various placement options, Figure 1 provides a snapshot of the ordinal frequency of various placement methods based on a sample of governments. Time or service, education, and current salary appear most commonly. In the last few decades, hybrid options that combine service with other factors (student placement rates, program marketability, and performance) have increased in importance. However, in many cases this change arose from outside forces, like requirements created by the state legislature. While service and professional development may play role in movement within the range, it typically plays a minor role for placement. Even fewer public organizations link placement to market potential or performance levels. During the recession, the few public organizations conducting some form of a pay plan update found that resource constraints prevented them from doing more than moving their ranges. In those cases, the new plan led to significant levels of compression as new faculty came into the range at the new minimum and above current incumbents.

Figure 1

The Frequency of Placement Methods by Likelihood

Given the impact of placement decisions on individuals as well as organizations, it is important that the transition to a new plan incorporate the optimal balance between fiscal responsibility and individual fairness. With this in mind, the following guidelines governed most successful transitions in the last decade:

• ·         Ensure that no employee loses real or “take home” compensation;
• ·         Preserve the internal pay relationships between employees when at all possible;
• ·         Link placement to movement factors when possible;
• ·         Correct any historical inequalities present in the old range structure;
• ·         Focus on factors that will encourage the desired behaviors from employees; and
• ·         Ensure that compression is mitigated at or shortly after implementation.