Minnesota State Colleges and Universities Faculty Pay Equity Analysis - Winona

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Minnesota State Colleges and Universities
Faculty Pay Equity Analysis - Winona

• Campus Presentations
• March 31 - April 4, 2003

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Agenda

• Project objectives and project steps
• Focus group and interview findings
• Pay equity strategy recommendations
• Statistical analysis, findings and
  recommendations
• Alternatives for pay equity adjustments
• Ongoing compensation administration
  recommendations

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Project Objectives
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Project Objectives

• The goal of the project is to identify any salary
  disparities and make recommendations to address
  fixing them. Objectives are to
• Identify disparities in salaries among all
  similarly situated non-adjunct university
  faculty.
• Present viable options for reducing disparities.
• Recommend changes that would reduce the potential
  for salary disparities arising in the future.
• Clearly communicate the results to the SRC and
  each of the 7 campuses.

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Project Steps

• 1. Project planning (99-02)
• 2. Data gathering and cleaning (00-02)
• 3. Understanding the organization and develop
  
  compensation philosophy (Nov -
  Dec 02)
• 4. Data analysis (Jan 03 - Feb 03)
• 5. Findings review and final report (Feb 03 -
  Mar 03)
• 6. Communication of results (Mar 03 - Apr 03)

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Roles

• Salary Review Committee (SRC) advisor to MnSCU
  IFO.
• Consultant advisor to MnSCU and IFO,
  facilitator, expertise provider.
• IFO/Administration -- responsible for bargaining
  compensation.
• Administration accountable for implementing the
  outcomes from the collective bargaining process.

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Salary Review Committee (SRC)

• Faculty
• Pat Arseneault - IFO staff
• Vicky Brockman - Southwest
• Ernie Grieshaber - Mankato
• Becky Omdahl - Metropolitan
• Pat Samuel - St. Cloud
• Tracy Scholl - Feminist Issues Committee
  (Moorhead)
• Karen Sterner - Multicultural Issues Committee
  (Southwest)
• Mandy Wick - Bemidji

• MnSCU
• Jan Anderson - Metropolitan
• Chris Dale -- Office of the Chancellor
• Ken Gorman -- Winona
• Gary Janikowski -- Office of the Chancellor
• A.I. Musah -- St. Cloud
• Judy Strong -- Moorhead

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Consultants - HayGroup
Established inPhiladelphia in 1943
34 countries/70 cities 23 North Americanlocations
Human Resources Compensation Consulting Firm
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Focus Group and Interview Findings
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Focus Group and Interview Process

• Hay conducted two days of focus groups and
  interviews with SRC members and other faculty and
  administrative representatives to develop a
  better understanding of
• Perceptions regarding pay equity.
• Issues impacting pay equity analysis and
  modeling.
• Perceptions about faculty salary administration
  processes.

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Focus Group/Interview Participants

• Faculty
• SRC Members
• Frank Conroy, IFO Dir Labor Relations
• Jim Pehler, IFO President
• Faculty Association Presidents

• MnSCU
• SRC Members
• Jim Lee, Compensation Specialist
• John Shabatura, AVC Labor Relations
• Linda Skallman, AVC Personnel
• Bill Tschida, Vice Chancellor

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Faculty Perceptions on Equity

• Primary driver of project perceived to be pay
  equity along gender lines.
• Comments ranging from there are inequities all
  over the place to our campus doesnt have any
  problems, but others do.
• Many believe pay disparities are caused by
  initial hiring salaries.
• Some believe bias in administration of
  promotions.
• Belief of compression in pay with longer service
  faculty.

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Faculty Perceptions on Equity (cont.)

• Allow ALL faculty to be eligible for potential
  pay equity adjustments, rather than restricting
  adjustments to members of a protected class.
• Provide for pay treatment on an individual (vs.
  member of a group) basis.
• We need to show evidence of reducing the pay
  equity gap over time, not necessarily eliminating
  the gap. A multi-year phasing is OK.

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Administration Perceptions on Equity

• Consider a broad based definition of equity,
  incorporating many elements rather than just
  gender and ethnicity.
• Allow ALL faculty to be eligible for potential
  pay equity adjustments, rather than restricting
  adjustments to members of a protected class.
• Provide for pay treatment on an individual (vs.
  member of a group) basis.
• We need to show evidence of reducing the pay
  equity gap over time, not necessarily eliminating
  the gap. A multi-year phasing is OK.

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Administration Perceptions on Equity (cont.)

• Turnover in administrators impacts ability to
  adequately understand the collective bargaining
  agreement and compensation administration
  processes.
• Most of the compensation administration policies
  are viewed as reasonable. The primary concern is
  in the execution and administration of the
  policies.
• Improve system level value-added administrative
  processes.

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Collective Perceptions of Work Culture/Climate

• High levels of distrust in the organization.
• Tension/animosity between the faculty and
  administration in many facets of the
  employee/employer relationship.
• This study needs to result in a calming of the
  waters. The study needs to be received as
  credible and thorough.

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Pay Equity Strategy Recommendations
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Definition of Pay Equity

• Working definition of pay equity
• Parity in salaries when considering all pertinent
  factors influencing pay, which can be objectively
  and consistently collected and which are
  logically related and/or statistically predictive
  of salaries.
• These factors include
• Discipline
• Rank
• Tenure Status
• Highest Degree
• Years in Rank
• Years Prior Experience
• Years Since Highest Degree

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Definition of Pay Equity

• This definition of equity will be monitored by
  these factors at both the campus and system level
• Equity will also be monitored by gender/ethnicity
  status at the campus level.
• This definition of equity does not include the
  following factors
• Campus location
• Rank at time of hire
• Other variables not collected by MnSCU because
  they are either not relevant or not feasible to
  collect. For example,
• Scholarly reputation
• Salary at time of hire
• Employee performance ratings

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Statistical Analyses and Findings
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Statistical Analyses

• Hay performed statistical analyses using the
  total population model for purposes of
  identifying pay disparities for protected classes
  within each campus.
• Used the following variables.
• Discipline, Rank, Tenure Status, Highest Degree,
  Years in Rank,
• Years Prior Experience, Years Since Highest
  Degree.
• Checked academic rank variable for taint.
• Taint in rank MAY mask statistically significant
  differences in pay
• Checked for compression in salaries by rank.
• Degree that incremental salary growth diminishes
  over time.

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Key Findings (2002)

• Base salaries examined for 2001-02 and included
  lawsuit-related adjustments for Bemidji, Moorhead
  and St. Cloud.
• There are NO statistically significant negative
  differences in pay by protected class status on
  ANY MnSCU campus.
• There were, however, negative differences in pay
  by protected class status, but none were
  statistically significant.
• There were also some statistically significant
  positive differences in pay.
• Across all campuses, there are high levels of
  salary variance explained by the independent
  variables, which suggests a strong relationship
  between salary and predictor variables.
• Adjusted R2 ranges from .78 to .92 across all
  campuses.

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Key Findings (1997)

• There are MORE statistically significant pay
  differences with protected class faculty in the
  1997 (vs. 2002) employee population.
• Four campuses (Bemidji, Moorhead, St. Cloud,
  Southwest) with statistically significant
  negative differences in average salaries between
  individual protected classes and white males.
• Two campuses (Bemidji and Southwest) with
  statistically significant differences in average
  salaries between protected classes and white
  males as a block/group.
• MnSCU campuses have reduced protected class pay
  disparities between 1997-2002.

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Key Findings (2002 and 1997)

• Consultants assessed system and campus level
  changes over time in R2 and the standard
  deviation of residuals.
• R2 have remained consistently high over time --
  i.e., high percentage of variance explained in
  salaries.

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Campus Level Findings
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Findings - Winona (2002)

• No statistically significant differences in
  average salaries between protected classes and
  white males, as a block or by separate category.
• High level of Adjusted R2 meaning that 91 of the
  variance in salaries is attributable to
  independent variables.

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Findings - Winona (1997)

• No statistically significant differences in
  average salaries between protected classes and
  white males, as a block or by separate category.
• High level of Adjusted R2 meaning that 89 of the
  variance in salaries is attributable to
  independent variables.

Total Population Model
Variance Explained in 1997 Salary
With Ethnicity Gender Variables.
By Structural and Ethnicity-Gender Variables

Unstdrzed
Adj
R Sq
Sig F
Beta
Sig.
Model
R Sq
R Sq
Change
Change
white female
-469
0.36
1
0.902
0.886
0.902
0.000
under-rep female
141
0.92
2
0.903
0.886
0.001
0.468
asian male
1439
0.24
under-rep male
1587
0.31
Model 1 Total Population Model w/o
Ethicity/Gender
Model 2 Total Population Model w/
Ethnicity/Gender
Note conventional statistical significance is
.05 or less.
Conventional statistical significance of F Change
is .05 or less.
Reference category is white male
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Findings - Winona (2002 1997)

• We did not find statistically significant levels
  of salary bias by protected classes after the
  rank variable was dropped from the model.
• We found statistically significant levels of
  compression in salaries for Professors in 2002
  and 1997.
• Note career steps not yet
• included in this analysis.

Predicted Average Salary (with out compression)
Salary
- 8000
- 2000
Example Winona Professor cumulative effect of
compression
- 500
Predicted Average Salary (with compression)
10
20
5
Years in Rank
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Additional Statistical Analyses
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Additional Statistical Analyses

• Consultants completed the following additional
  statistical analyses per MnSCUs request
• Analyzed 1997 and 2002 data sets at system AND
  campus level to determine the effect of academic
  discipline on salaries.
• Analyzed 1997 and 2002 data sets at system level
  ONLY to determine the effect of campus location
  on salaries.

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Effect of Campus Location(2002 and 1997)

• Consultants analyzed system wide data and found
  the following average differences in salary
  across campuses when controlling on all other
  variables.
• There is a 3,229 range of average difference
  between the lowest and highest campus in 2002 and
  a 2,155 difference between the lowest and
  highest campus in 1997.
• Bemidji is the lowest paying campus when
  controlling for all other variables. St. Cloud
  (1997) and Southwest (2002) are the highest
  paying campuses.

() Mankato reference campus
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Effect of Academic Discipline (2002 and 1997)

• At the System level, we analyzed the effect of
  discipline on salary equity and found the
  following differences in average salary

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Effect of Academic Discipline (2002 and 1997)

• The following disciplines have increased in
  relative average pay between 1997 and 2002.
• ALHEL- allied health (speech audiology dental
  hygiene communication disorders)
• COUED- counseling education
• COUNS- non-teaching counselors
• CRMJS- criminal justice corrections
• CULTR- area, ethnic cultural studies/humanities,
  multi Interdisciplinary studies
• TECHN- engineering related technologies -
  industrial technology, environmental technology
• The following disciplines have decreased in
  relative average pay between 1997 and 2002.
• AVIAT- aviation
• EDCAD- education administration leadership
• EDCGN- general teacher education at all levels
• MEDIA- communications media communications
  technologies
• POLSC- political science public administration
  paralegal
• SERFC- services provided to faculty, university
  community
• SOCAN- sociology anthropology
• THETR- theatre arts stagecraft

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Effect of Analysis Without Academic Discipline
(2002 and 1997)

• Consultants developed models at campus and system
  level, which excluded discipline as an
  explanatory variable.
• The variance explained by the reduced set of
  independent variables is considerably less than
  when including discipline.
• System R2 reduction of 9 (2002)
• Consultants do NOT recommend utilization of a
  statistical model that excludes discipline
  because of its explanatory power.

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Pay Equity Increase Alternatives
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Pay Equity Increase Alternatives

• The consultants have been asked to identify pay
  equity disparities and how to fix them.
• The consultants take no position on the amount of
  total pay equity increases to be considered -- we
  assume this part of the bargaining process.
• The consultants have developed recommended pay
  equity increase criteria in the event that MnSCU
  determines to authorize pay equity expenditures
  through the collective bargaining process.

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Pay Equity Increase Criteria

• Potential pay equity adjustments should be based
  on individual criteria rather than group
  membership criteria.
• Pay equity issues should be addressed through an
  examination of disparities between actual and
  model predicted salaries (i.e., residuals).
• Using the variables identified in the total
  population model.
• Gender and ethnicity variables not included.
• Any faculty member below a threshold (see next
  slide) will be eligible for a potential pay
  adjustment, if adjustments are recommended.
• We used the notion of a threshold (std error) due
  to the fact that there is a range of acceptable
  variation in the model not explained by the
  predictor variables. Therefore, adjustments to a
  predicted average salary are not recommended.
• Potential pay equity adjustments will be
  scrutinized by a MnSCU/IFO salary review
  committee for data verification purposes.
• If required, consider a multi-year phase-in
  approach based on funding availability.

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Pay Equity Increase Criteria

• Analyze costs based on the following 3
  thresholds, where residual actual salary -
  estimated salary
• -1 standard error of the est. If residual lt 1
  std error, adjust to 1 std error.
• -1.5 standard errors of the est. If residual lt
  1.5 std errors, adjust to 1.5 std errors.
• -2 standard errors of the est If residual lt 2
  std errors, adjust to 2 std errors.
• Note all adjustments rounded to closest 2.39
  step.
• Two models () alternatives utilized
• Campus level total population models for all
  campuses.
• System level total population model.
• Note() due to small numbers of faculty within
  disciplines, there were coding difficulties for
  Metropolitan and Southwest. Therefore, we
  developed a Hybrid model alternative using
  system discipline estimated coefficients applied
  to the campus model.
• The IFO MnSCU SRC will recommend the most
  appropriate threshold and model to be utilized.

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Pay Equity Increase Example
Example Using a threshold at -1 std error of the
estimate, Professors F, G and H would receive an
adjustment and be moved to the closest step.
Professor A (74,303)
Threshold at 2 Std Error Est. (67,399)
Professor B (66,006)
Threshold at 1.5 Std Error Est. (65,261)
Professor C (64,461)
Threshold at 1 Std Error Est. (63,123)
Professor D (60,041)
Predicted Average Salary (58,847)
Professor E (58,636)
Threshold at -1 Std Error Est. (54,571)
Professor F (53,336)
Threshold at -1.5 Std Error Est. (52,433)
Professor G (50,868)
Threshold at -2 Std Error Est. (50,295)
Professor H (48,515)
Note Example Std Error Est 4,276
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Pay Equity Increase Model FindingsHeadcount
Analysis
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Pay Equity Increase Model FindingsAggregate Cost
Impact

• The cost estimates on the next three slides were
  compiled by the consultants and are based on 9
  month base salaries that do not include fringe
  benefits nor additional assignments.
• Therefore, cost estimates may not accurately
  reflect the total estimated adjustments for
  reporting to relevant parties in the bargaining
  process.

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Pay Equity Increase Model FindingsAggregate Cost
Impact
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Pay Equity Increase Alternatives Findings

• For the campus total population model
• 1 std error est. threshold, total adjustments of
  491.5K (8 of faculty).
• 1.5 std error est. threshold, total adjustments
  of 161.1K (3 of faculty).
• 2 std error est. threshold, total adjustments of
  47.8K (1 of faculty).
• For the hybrid total population model
• 1 std error est. threshold, total adjustments of
  522.4K (8 of faculty).
• 1.5 std error est. threshold, total adjustments
  of 180.1 (3 of faculty).
• 2 std error est. threshold, total adjustments of
  47.7K (1 of faculty).
• For the system total population model
• 1 std error est. threshold, total adjustments of
  550.1K (8 of faculty).
• 1.5 std error est. threshold, total adjustments
  of 196.3K (3 of faculty).
• 2 std error est. threshold, total adjustments of
  88.1K (1 of faculty).

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Pay Equity Increase Model FindingsCampus Models
by Gender/Ethnicity
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Findings

• In aggregate, while at 50 of the faculty
  population, employees in protected classes
  receive less than 50 of modeled increases.
• Remember that there were NO statistically
  significant negative differences in pay by
  protected class status on ANY MnSCU campus.
• There were, however, negative differences in pay
  by protected class status, but none were
  statistically significant.
• There were also some statistically significant
  positive differences in pay by protected class.
• At Winona, modeled increases do not result in any
  statistically significant negative differences in
  pay by protected class status. Modeled increases
  include
• 2003 general increases and career step
  adjustments.
• Legally settled base salary adjustments.
• Pay equity adjustments per three different equity
  adjustment thresholds.

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Ongoing Compensation Policy Recommendations
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Compensation Policies

• More rigorous and more frequent training in
  compensation processes is needed. Due to
• Decentralized administration governance model.
• High turnover in campus administrators.
• Consider the following training on a system-wide
  level
• More consistency in determination of hiring
  salaries.
• More consistency in determination of market
  influences in pay.

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Compensation Policies

• Consider bargaining any ongoing equity
  adjustments into the annual general increase
  program.
• Provides those faculty with the most negative
  residuals the opportunity to move closer to
  predicted salary faster.
• Development of new or improved MnSCU information
  systems to assist campuses in compliance with
  guidelines and the ongoing effectiveness of
  program
• Promotion application, acceptance and rejection
  rates.
• Compensation market analysis and support tools.
• In general, better information sharing across
  campuses (e.g., experience definitions by
  discipline).

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Hiring Guidelines

• The hiring guideline (grid) is sound
  conceptually, but is perceived to be
  administered/applied inconsistently.
• Across campuses and departments.
• Five steps variance in each cell.
• Develop more consistency in hiring guidelines.
• More consistency in administration, training,
  communication on relevant experience levels.
• More robust definitions of relevant experience by
  discipline.
• Consider cross campus teams developing these
  definitions.
• Consider multi-tier market-based hiring
  guidelines/grids.
• Would likely reduce the range of steps within a
  cell.
• Would likely reduce the variance in starting
  offers.
• Monitor hiring guidelines against external survey
  sources.

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Salary Change at Promotion/Degree Completion

• Consider latitude in salary change at promotion
  to better enable a narrowing of pay equity gaps.
• Consider moving from a current flat 2 step
  increase to an increase system based on gap
  between current and predicted salaries at time of
  promotion.
• Consider adjustment upon receipt of a terminal
  degree.
• Institutionalize annual campus reviews of
  promotion application, acceptance and rejection
  rates and analyze by protected class status.

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Ongoing Audit Process and Measuring Effectiveness

• A narrowing of the gap in salaries over time is
  viewed as the primary measure of success.
• MnSCU should consider an annual review of salary
  levels by key faculty attributes (esp, protected
  class attributes) to verify that gaps in salaries
  are indeed narrowing.
• MnSCU should consider an annual review of salary
  levels against external market data sources to
  ensure that salaries and hiring guidelines are
  competitive.
• Consider codifying a set of compensation
  principles and monitoring them in the future vs.
  revisiting methodology every 4 years.
• Continued utilization of a team (SRC) comprised
  of faculty and administration to provide guidance
  to the analysis and monitoring of pay equity
  issues.

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AAUP Recommended Best PracticesJuly - August
2001 Academe

• Joint teams of administrators and faculty members
  working together to resolve issues. Litigation
  should be last resort.
• Establishment of a salary schedule that fairly
  sets starting salaries.
• Conduct periodic salary and promotion equity
  studies (e.g, American University, Kent State
  University, NC State Univ) - Raleigh.
• Consistent training on compensation
  administration practices for all administrators
  with compensation management accountability.
• Create equitable merit pay systems (where
  applicable).
• Establish inclusive eligibility criteria for
  equity adjustments -- includes males and females.
• Provide briefings on salary practices for new
  faculty.

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Your Questions