Special pay practices (non-base)
Following are guidelines and some examples to assist hiring managers in making one-time pay decisions. There is no addition to base pay and payments are discontinued once the special circumstance no longer exists.
When staff members temporarily fill in for a higher-paid position or assume significant duties in addition to their regular job, a temporary pay increase may be appropriate. Any proposal to temporarily increase a staff member’s pay under these circumstances should be discussed with your Senior HR Business Partner.
Some University operations provide around-the-clock services or require work schedules outside the normal workday. Examples include computer operations staff in ITS, nurses and nurse practitioners in Health Services, and Public Safety officers. Any proposals to supplement the wages of non-exempt staff scheduled to work non-traditional hours should be discussed with HR.
Variable Pay Program (non-base)
In keeping with its philosophy of providing managers/supervisors with greater flexibility in rewarding staff, SU has a Variable Pay Program. The program was conceived as an incentive and retention tool that will provide a non-base option for one-time compensation of non-faculty exempt and non-exempt staff whose performance is outstanding in special, non-recurring circumstances. Bargaining unit staff are not eligible for variable pay awards under their current contract.
It is important to understand that this program is not intended to reward sustained excellent performance within the scope of one’s job – such performance is more properly recognized with substantial increases to base pay. The Variable Pay Program provides an option for recognizing significant one-time accomplishments deserving of reward, but not in the form of a base salary increase that remains a part of the staff member’s annual compensation for the length of his/her employment at SU.
The guidelines provided here will give you a starting point from which you may develop your own program to suit the particular needs of your operation. HR is available to assist in all phases of developing a Variable Pay Program.
Administering the program
HR is available to assist departments in developing simple, easy to manage processes for administering Variable Pay. Some basics are:
- Involve participants in setting the goals where possible.
- Keep participants well informed so that they can fully understand the intentions of the program and how their own performance will contribute to goal achievement and earn them an award.
- Assess performance and determine eligibility by analyzing the impact of individuals and/or teams on desired outcomes, processes, or efforts leading to the outcome (“line-of-sight”) relative to goals/expectations.
It would be helpful to conduct a “post-mortem” once the performance period is completed and the awards have been distributed. This is particularly important if the program is intended to continue beyond one award cycle, so that necessary modifications can be made to maximize effectiveness (HR is available to assist).
Some of the questions to ask are:
- Was the desired level of performance achieved? If so, are there indications that the Variable Pay Program contributed to it? If not, what are the reasons?
- Was the program (performance goals, award levels, processes, etc) appropriately communicated to participants? Did participants understand the program and how their individual performance would impact the desired results and their payouts?
- Did participants feel that the awards were commensurate with the performance expectations?
- Were the appropriate staff members/jobs eligible for the program?
There are two variable pay models: retrospective and prospective.
A retrospective variable pay award recognizes extraordinary performance after the fact. The criteria and award levels are identified after the performance has occurred.
Implementing and managing the retrospective model
- Managers/supervisors assess performance relative to job expectations by analyzing the impact of individuals and/or teams on desired outcomes, processes, or efforts leading to the outcome.
- Managers/supervisors determine the appropriate award (HR is available to assist) and secure the appropriate approvals (see “Variable pay award size, funding, and benefits impact“).
- The work assignments of a key staff member who is out of work for an extended period of time (e.g. disability) are distributed to other staff so that important project milestones are met. This adds significantly to their workload as they continue to perform their own work in addition to that of the missing staff member.
- A storm on Labor Day 1998 caused significant damage to campus property and disrupted services. Salaried staff participated in the after-storm cleanup, in addition to their own regular work responsibilities.
A prospective variable pay award is based on planned performance related to a project/initiative or other type of anticipated work. The intent is to generate higher levels of performance and reward people for their role in achieving these levels. Actual performance is evaluated by comparing it to planned performance. Awards are based on this comparison. Prospective variable pay awards are used mainly for incentive and retention purposes. Much more preparation is involved in using a prospective model.
Implementing and managing the prospective model
- Determine if a prospective variable pay award would positively impact performance or otherwise enhance results for a planned project/initiative.
- Determine the goals/objectives and performance levels necessary to achieve desired outcomes. Establish criteria for earning prospective variable pay awards and the award levels (HR is available to assist).
- Managers/supervisors develop (HR is available to assist) and submit a proposal to the director or department head, who will submit it to the appropriate dean or cabinet officer for approval. The proposal should document goals and expectations for performance overall and on an individual/team level, including:
- desired outcomes
- processes, activities, and resources needed to achieve the outcomes
- method and criteria against which performance will be evaluated
- Communicate the purpose to staff. It is imperative that participants have a good understanding of the broad objectives the department is attempting to achieve, as well as the more specific, individualized objectives that he/she can contribute to. Without this understanding, the performance levels achieved are unlikely to be maximized.
- A prospective variable pay award was developed to address retention issues related to a multi-year client-server conversion project that significantly impacted University operations and required considerable sustained attention to the project activities and deadlines. The program was successful in assuring retention of key staff for the duration of this critical project by rewarding them for their exceptional efforts.
Variable pay award size, funding, and benefits impact
The following processes apply for both retrospective and prospective variable pay models, unless otherwise noted.
Award approval process
- All proposals should first be reviewed with your Senior HR Business Partner.
- Proposals for prospective variable pay awards and nominations for retrospective awards, including the suggested funding source, must be approved by the dean, vice president, or senior leader with support from their respective Executive Team leader
- Proposals originating from the Chancellor’s office may be approved by the Chancellor, or by the Senior Vice President/Chief of Staff on the Chancellor’s behalf.
- Managers/supervisors are encouraged to confer with their Senior HR Business Partner to determine an appropriate target award amount, considering factors such as magnitude and value of the performance expectations, contributions/potential contributions of individual staff members, competitive pay practices, department budget, practices in similar situations in other departments, etc.
- The minimum award under the variable pay program is $500.
- Awards payable under the program will come from the department’s budget or the project budget as appropriate. Approval of the suggested funding source is necessary and will occur during the approval process noted above.Potential department funding sources include:
- Departmental budget
- general operating
- personnel categories, e.g. a percentage of the annual increase
- Vacancy credit
- Restricted funds for which such awards would be permitted
- Funding a Variable Pay Program from a project budget requires the approval of the cabinet officer(s) with spending authority for that budget.
- In the case of Prospective awards, managers/supervisors should determine in advance the maximum amount needed to fund the program if all expectations are met, and ensure that the funds will be available.
- Departmental budget
- Variable pay awards are not eligible for the University’s contribution to TIAA. They are subject to a flat percent tax withholding rate (approximately 40%). This information should be communicated to participants and taken into account by managers/supervisors when contemplating the amount of a variable pay award.
Setting expectations and performance criteria for variable pay awards
Here are a few guidelines to help you define performance criteria and expectations for a Variable Pay Program.
The measure of extraordinary performance begins with the identification of performance expectations. Performance expectations should be prioritized and:
- Measurable – quantitatively, or as the way something is accomplished, or as a contributing factor to the results (or all of the above).
- Attainable yet provide for a stretch – managers/supervisors and staff discuss what is expected and what would be considered outstanding performance.
- Time specific – defined/driven by the project/event.
- Agreed upon – in the case of prospective variable pay awards, discussion between managers/supervisors and staff is critical to ensure an understanding of what the expectations are and the potential rewards.
- Based on results not activities – rewards should be linked to results that are both defined up front and agreed to by managers/supervisor and staff members (prospective awards), or acknowledged after the fact (retrospective awards).