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Compensation Glossary

The following terminology is commonly used when discussing compensation.

Base Pay

The rate paid by the hour, week, month, or year to an individual for the job performed. This does not include shift differentials, overtime, incentives, benefits, or any other pay element other than base pay.

Benchmark Job

A job commonly found in the marketplace which is used as a reference point for making pay comparisons.  Pay data for these jobs are readily available in published salary surveys.

Career Streams

A progression that describes the nature and level of work being performed. Ladders will exist for organizational contributor, professional contributor and manager/leader streams, with multiple job levels within each stream. Levels are defined by work dimensions.

Compa-ratio

The ratio between an employee's base base and the midpoint of the salary range the job is assigned to (base pay divided by midpoint).  A compa-ratio is used to determine the relationship of an employee's pay to the market and how an employee's pay is moving through the assigned salary range.

Compensation Philosophy

A set of principles that guide the design and administration of a compensation system toward supporting the organization’s strategy, culture and achievement of organizational objectives.

Competencies

Basic units of knowledge, skills and abilities employees must acquire or demonstrate in order to successfully perform work.

Compression

Pay differentials too small to be considered equitable. In some organizations, the term may apply to differences between:

  • Pay of supervisor and subordinates;
  • Pay of experienced and newly hired employees in the same job;
  • Midpoints in successive grades.

Equal Employment Opportunity Commission (EEOC)

A commission of the federal government charged with enforcing the provisions of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Equal Pay Act of 1963, and other fair employment practices legislation.

Equal Pay Act of 1963

An amendment to the Fair Labor Standards Act of 1938 prohibiting gender-related pay differentials on jobs that are substantially equal in skill, effort, responsibility, and working conditions unless the differences exist due to a seniority, merit-or production-based pay system, or any other job-related factor other than gender.

Exempt

Employees exempt from the overtime provisions of the Fair Labor Standards Act. Generally this group includes executives, administrative/professional employees, and outside sales.

External Equity

A measure of an organization’s pay levels or salary ranges compared to that of its labor market competitors. External equity implies that the employer pays wages that are competitive with prevailing external market pay rates, as determined by market pricing.

Fair Labor Standards Act (FLSA)

A federal law governing minimum wage, overtime pay, equal pay for men and women in the same types of jobs, child labor and record-keeping requirements. Contained within this law are the categories of exempt and non-exempt work. Exempt employees are those whose jobs are not subject overtime payment provisions of the FLSA. Non-exempt employees are those whose jobs are subject to the overtime pay provision of the FLSA.

Geographic Differentials

Establishing different pay levels for the same job based on differences in cost of labor for a specific geographic region.

Internal Equity

A standard that fairly establishes a pay level that corresponds to each job's relative value to the organization and aims to maintain appropriate parity between incumbents in the same job based on individual contribution to the organization.

Job

The total collection of tasks, duties and responsibilities assigned to one or more individuals whose work has the same nature and level of work.

Job Architecture

Job architecture (sometimes called job structure, career architecture, or leveling) refers to the infrastructure or organization of jobs within the University. Job architecture encompasses job levels, job titling conventions, salary grades, career tracks, scoping factors, and equitable compensation programs based on market value. Job architecture serves as the foundation for effective pay program design.

Job Assignment

The assignment of a job to a hierarchical structure or job architecture and salary grade based on job evaluation of job content and the going rate for comparable jobs in the external labor market.

Job Evaluation

A formal process to determine the value of jobs within the organization. The end result of job evaluation consists of an assignment of jobs to a hierarchy of grades.

Job Functions and Families

Job Functions are broad categories of work that can be logically grouped together based on having similar characteristics or prerequisite skills.

Job Families are the unique occupations within a job function that can be performed at various levels based on scoping factors.

Example:

  • FUNCTION: Information Technology
  • FAMILIES: Network Administration, Desktop Support, Systems Programmer, Telecommunications, Web Developer, etc.

Market Analysis

An annual process conducted by The Division of Human Resource's compensation team to analyze job trends and salary levels/rates paid in the market. Market data reflect the geographic regions and the types of industries from which we recruit. These may include for-profit and not-for-profit organizations, local and national organizations, and higher education institutions as well as general industry firms. Results of the market analysis process are used to make an annual recommendation for the compensation program.

Market Rate

Rate of pay for each job based on the aggregate, representative market data from salary surveys.

Midpoint

The salary that represents the middle (or 50th percent) of a given salary range.

Nonexempt

Employees who are subject to the minimum wage and overtime pay provisions of the FLSA.

Position Description

A summary of the most important features of a position, including the general nature of the work performed (essential duties and responsibilities) and level (e.g., scoping factors) of the work performed. It incudes skills, experience, education and characteristics required for competent performance of the job. A position description describes and focuses on the job itself, not on any specific individual who might fill it.  Position descriptions are used to assign a specific position to a more broadly defined job.

Salary Grade

A specific component in a salary structure that groups jobs for pay policy application. All jobs in a salary grade have the same salary range: minimum, midpoint and maximum.

Salary Range

The range of pay rates, from minimum to maximum, established for a salary grade or classification. Typically used to set individual employee pay rates, the range reflects lower and upper bounds of pay for jobs.

Salary Structure

The array and hierarchy of salary grades and the associated pay ranges established for different jobs within an organization.

Salary Survey

The gathering, summarizing and analysis of relevant market data on wages and salaries paid by other employers for selected key classes of jobs. Salary surveys are used to establish or price a salary structure, analyze pay-related problems, and/or adjust pay levels in response to competitive pay changes.

Total Compensation

The complete pay package for employees, including all forms of salary, benefits and services.

Work Dimensions

Descriptors used to distinguish one level of a job from the next. They include things like knowledge, complexity of work, communication, operational latitude/impact, risk, leadership,  required education and experience.