Understanding of Salary Adjustments and Job Position Reclassification - Term Paper Example

The focus of this study research to obtain understanding of salary adjustments and job position re ification within public organizations. It will examine the Y-rating and Compratio methods of managing job classification and pay range systems. The research method is a qualitative case study of the State of Washington’s job reclassification and salary reallocation processes from the perspective of United States government regulations and the employees. The method is defined, researched based up on recent cases, and critiqued based upon gathered qualitative data. The thesis for consideration of the methods is specifically their impact on pay scale adjustments and thus labor collective bargaining efforts. These are regarded as under-researched topics of study due to the lack of current literature and, therefore, can be regarded as a relatively new topic for research. A special focus is given to the State of Washington’s legislative strategies for labor management. In conclusion, a determination is given for or against each method as whether it is an adequate compensation and job reallocation strategy. Contents 1. Introduction 3 2. Rationale of the Study…………………………………………………………………...5 3. Research Method……………………………………………………………………….6 4. Qualitative Data………………………………………………………………………….7 4.1 Alternatives 4.2 Legislation 5. Conclusion……………………………………………..………………………………….13 6. References………………………………………………………………………………..14 7. Illustrations & Tables…………………………………………………………..……18 Managing Compensation and Job Position Classifications 1. Introduction The power to create, increase, or decrease a salary is a capability of special interest. This is because the opportunity to increase one’s earnings creates a motive to delay or deny increase for others. “ A practice known as ‘Y-rating’, (named) after a line on an old form that is no longer used, happens after a job becomes the target of reorganization” (Schrader, 2012). The challenge to reorganize job positions includes considerations of salary and job duties. As with most hierarchical distributions of power, there will be instances of abuse. In an economic era of social emancipation, natural disasters, and political repositioning, job classification and compensation have been added to the list of ‘things to change’. While the United States’ Congress has become preoccupied with war and healthcare reform; employers set out to update methods of job classification to regain control in collective labor bargaining agreements. Compensation computations methods generally reflect the perspectives of government, management, and staff. The United States Office of Personnel Management provides salary and job reallocation policy and interpretation. According to Farlex, on compensation strategy: “At the broadest level, we can classify compensation as either related to organizational membership or to performance. Indirect compensation (fringe benefits) is intended to motivate individuals to join and remain with the organization” (Farlex, 2004). Some employers have adopted new models to manage compensation that are based upon modern theory, while others chose to utilize the traditional Y-rating methods. Y-rating is utilized in new job classifications and salary creation and reconstruction. Over the past decade, personnel management systems have become regarded as too complex, even archaic, in an era which emphasizes streamlined human resource approaches. Many organizations have undergone a series of personnel and job classification reforms in order to simplify personnel systems (Wise, 2002). Part of the overall trend of personnel and job reclassifications involves the transitioning of employees from one job classification and pay range to newer, but similar classifications. This process is referred to as ‘y-rating’. The Y-rating method has been used in some fashion for resources management, for decades. The success or failure of the method is researched by juxtaposition of government labor legislation results, a case study of state level human resource management, and the results of implementation of the method, particularly by the State of Washington. 2. Rationale of the Study In order to achieve a cohesive realignment of a public entities job classification and pay range systems, organizations utilize a variety of personnel management strategies. Using a mathematical approach creates a more standard salary. Employees may view an equation as fair as opposed to salaries set according to personal evaluations Y-rating is used by labor unions and management alike for a variety of purposes, including position reallocation while still retaining the effected employee. An increased understanding of compensation and job position management may impact its adoption within future labor-management agreements and human resources reform. Additionally, it may be possible to trace the transference of these provisions from one state to another. Furthermore, the research will allow for real and theoretical applications to be developed and applied across multiple fields and disciplines. Purpose A. Used in unionized City, County, State, or other similar organizations in areas of the United States to manage labor. B. Used by labor unions to retain members and positions, who were in previously higher maximum pay scales. C. Explore negotiation of the methods into labor contracts. D. Determine impact on redundant job classifications. E. Determine relationship with civil service and administrative code reforms. 4. Research Method To facilitate this research study, a qualitative examination of human resources compensation and positioning methods was performed by analysis of sources, including: Public system human resources practice manuals Personnel administrative codes Labor-management agreements Salary adjustments and human resource management is, in general, a very broad topic. For this reason, the case study method was chosen to gather data and draw conclusions. In an era of Salary Wizard and CompAnalysis, states use a kaleidoscope of methods to readjust salaries and positions. The research for this report is largely drawn from a case study of the State of Washington; particularly areas of labor and wage management. Comparisons were made between the State of Washington and other states and also Federal laws. The fact that income and job description issues apply to salaried positions implies that corrective measures are needed in the executive arena, at the top of the hierarchy. Also, the formation of an employee union supports this theory. Employee salaries, positions, and ratios were drawn from the states records from 2002 to 2012. The state’s employment website was researched for information on practices, legislation, and employee feedback to human resources actions. The method is used to rate the appropriateness and efficiency of the State of Washington’s human resources management. 5. Qualitative Data The qualitative data researched, includes primary sources via Google searches. Additionally, searches were focused towards public organizations, particularly the state of Washington and its personnel management policies. The numeric data includes Washington’s Minimum Wage History from 2002 to 2013 and an example of Comparatio as methods. Facts 48 Y-rated employees at the Department of Enterprise Services appealed the reclassification of their jobs last October – (Schrader, 2012). The Personnel System Reform Act of 2002 provides for bargaining by the Governor & representatives of employee units” (Ways & Means, 2012) The case study of the state of Washington’s human resource policies is based upon an analysis of 412 salaried positions. The Copy Center Lead experienced the greatest variation in salary with a difference of $ $2,653 (EXCEL, 2012). The Digital Printing Operator positions increased steadily as the level increased. The Level 1 Operat0r salary increased from a $485.44 variation to a $659.44 variation for a Level 2. A Level 2 operator salary varied by $1,191.94 from a Level 2 to a Level 3. Both the Revenue Agent position and the Revenue Agent 4 positions experienced the least amount of change with a difference of $1. According to Ojimba: “In some instances, people fill hybrid jobs - a person might be asked to be both HR manager and office manager. It is important to review the data for each of the components of the hybrid job, and develop a market price accordingly” (Ojimba, 2005). Excerpt from Washington Y Rated Employees Report, (Excel, 2012) JOB Basic pay Min. grade level Max. grade level Difference ADMIN REGS ANALYST 4 6,144.00 4,192.00 5,498.00 646.00 ADMINISTRATIVE ASSISTANT 2 3,276.00 2,370.00 2,971.00 305.00 ASSISTANT STATE AUDITOR 4 6,334.08 4,627.00 6,069.00 265.08 AUTOMOTIVE MECHANIC SUPERVISOR 4,246.00 3,485.00 3,944.00 302.00 BUDGET ANALYST 3 4,982.00 3,614.00 4,741.00 241.00 BUDGET ANALYST 4 5,297.00 3,991.00 5,233.00 64.00 BUILDING COORDINATOR 4 4,860.00 2,370.00 2,971.00 1,889.00 COPY CENTER LEAD 5294.83 2112.36 2641..32 2,653.51 Reallocation Methods Employers have a kaleidoscope of options on how to manage income and job positions. Some use little strategy, but more so tradition. Practices are sometimes handed down from previous administrations and innovation or reform has not been triggered. Of the agencies that do seek strategies through consulting or computer software, some human resources facilitators prefer a mathematical method to calculate variances in salaries. A mathematical method provides greater consistency than at-will approaches. Also, employees will most likely view an equation as fair as opposed to salaries set according to personal evaluations. According to an article from Salary.com. “A companys pay structure is the method of administering its pay philosophy. The two leading types of pay structures are the internal equity method, and market pricing, where each job in an organization is tied to the prevailing market rate’ (Salary. 2012). The internal equity method requires each position is compensated against positions immediately above and below it. A strong mathematical method that assists in figuring increases or decreases in pay is the Comparatio method. Comparatio is a popular mathematical method to determine salary variances. “Comparatio is the employee’s current salary divided by the current market rate as defined by the company’s competitive pay policy” (Salary, n.d.). The formula is also used by substituting the company’s salary range midpoint for the current market rate. Using this approach creates a more standard salary. In the following example, the employer requires a 50% criteria rating to issue a pay raise: Comparatio Method, (Salary, n.d.) John Smith Pay Grade 1 2 3 Salary Range $30,000 to $40,000 $40,000 to $50,000 $50,000 to $60,000 Adjustment/Raise Criteria: 50% Current Salary: $30,000 Midpoint of Pay Grade 3= $50K + $60K/2= = $55,000 Comparatio % = $30,000/$55,000 = 55% Since the ratio is larger than the 50%, the employee would qualify for the raise. If the percentage were lower than 50%, the executive management could still authorize the raise. Comparatio can be used as a secondary method for wage and compensation management. The downside to the Comparatio method is it will only consider current market value, which may be less because of the current economy. According to Ojimba, “The pertinent value in the market pricing method is not the midpoint of a grade, but the midpoint of that job, along with the employees Comparatio, or salary divided by the market rate” (Ojimba, 2005). In a recession, it is likely no one would be properly compensated, either overpaid or underpaid. Also, by substituting the company’s salary range midpoint, the applicant’s supervisory experience is still not taken into consideration. However, a separate scale for the experience can remedy this problem. Legislation In 2002, the WPEA achieved the Personnel System Reform Act, SHB 1268 (WPEA, 2012) The Substitute Senate Bill No. 6591 did not pass. (Ways & Means, 2012). From salary disputes to sexual harassment, employee management is a full time job. The State of Washington has continuously passed legislation to revise the methods of human resource management for decades. Over time, a non-profit employee union evolved to represent the concerns of agency workers. As the Whistleblowers marched on Congress, the WPEA marched on Washington State, challenging traditional methods that overpaid the overpaid, and distributed whatever was left. Whistleblower Protection Enhancement Act, 2012 (Whistleblower, 2012) The Y-rating system applies to salaried, permanent employees. Hourly workers must wait for minimum wage increases or raises. Many consider the state as employee friendly, partly because Washingtons minimum wage is higher than the Federal Minimum Wage. "The State of Washingtons (labor) department has approximately 2,700 workers as of 2010 and more than 20 offices for the workforce" (Pendergast, 1999-2012). A large area of concern is determining who qualifies as an employee and therefore can expect coverage from the state and federal legislative agencies. Most argue that this should be determined by economic dependence. If the employee depends upon the position to support himself, he should be considered an employee. The state of Washington is held accountable for employment practices, including demotions and pay cuts, by the Federal Government. The state’s employees have formed a union which lobbies for many things including fair pay and merit, tenure, non-discrimination and benefits. History of Minimum Wage in Washington State, (Washington, 2012) Effective Minimum wage per hour January 1, 2013 $9.19 January 1, 2011 $8.67 January 1, 2010 $8.55 January 1, 2007 $7.93 January 1, 2005 $7.35 January 1, 2004 $7.16 January 1, 2003 $7.01 January 1, 2002 $6.90 “Employers cannot terminate the employees for illegal reasons or reasons that violate public policy laws” (Stillman, 1999-2011). The State of Washington is an at-will state, with full power to terminate an employee and or a position for most reasons, with little notice (Stillman, 1999-2000). The decision to demote or terminate should make sense. "Employers engage in employment discrimination if they demote an employee, reduce wages or benefits or harass him after (the employee) files a complaint or states that he intended to file a complaint” (WPEA, 2012) “Title 357 WAC: A (Washington) employee’s base salary may be set above the maximum of the salary range when allowed under any provisions of the Title 357 WAC or when approved by a Director” (Washington, 2012). Collective Bargaining After wrestling with labor issues with little voice and even less opportunity to use it, Washington state workers rallied together. “Most companies review salaries once or twice a year, but the market moves continuously. Therefore, a companys pay is likely to be at market value just once or twice a year, similar to the hands on a broken clock, which only tell the correct time twice a day” (Ojimba, 2004). In 1956, the Washington State Employees Association (WFSE) was founded by local employees. In the 1970s, the WSEA had begun to negotiate for fairer policies (WPEA, 2012). By 1975, the WSEA changed to WPEA, the Washington Public Employees Association (WPEA, 2012). 5. Conclusion In the past, companies relied upon the business foundations of their predecessors to structure human resource management plans. Technology was not what it is today, and even if it was, traditions can be hard to break. “Companies research what merit increases and salary movements historically have been (approximately 3.5 percent on average recently) and then project budgets for market adjustments and merit increases” (Salary, 2012). Over the past decade, many states and related public organizations have undergone a series of personnel and job classification reforms in order to simplify personnel systems. Strategies that support ethics and social responsibility promote long-term goals. “Making ethical business decisions consistently is a key to long-term success for any business, although ethical decision makers may, at times, achieve weaker short-term financial results’ (Ingram, 2012). For human resources decisions, tride-offs of values can mean even greater distress years after the trade-off. In the world of business, the values of the corporation can contrast with the personal values of the employee. The fact that the executive management can override most compensation or other personnel decisions intensifies the agency’s human resource issues. “The agency director reserves the right to make exceptions allowed under civil service rules at any time” (Washington, 2012). The effects of salary moderation decisions may be immediate or reach far into the future. Sometimes, it is unapparent if the employee knows what the values of the corporation are. “More than 400 (Washington) state employees have the same dispensation to make higher pay than the range established for their jobs” (Schrader, 2012). In some instances, only the outcome can determine which decision was the right one. In other instances, none of the choices seem appropriate. Although the WPEA did not redistribute executive power in decision making, it gave the workers a legitimate voice, a platform, which is a great accomplishment. Today, United States organizations have much more power to govern the management of their businesses. The employees have a limited amount of coverage from the Federal Government legislation, from there the organization policy is the referee. Whether or not the Y-rating method is the best method for Washington’s human resource managers can be observed by the impact of the changes on the agencies’ budgets and employee turnover rate. Although the formation of the WPEA did not redistribute executive power in decision making, it gave the workers a legitimate voice, a platform, which is a great accomplishment. Furthermore, the examination and understanding of y-rating provisions will allow for real and theoretical applications to be developed and applied across multiple fields and disciplines. References Barry’s Business Dictionary: Case Study Method. Answers.com. Retrieved December 05, 2012 from http://www.answers.com/topic/case-study-method Bryant, B. (1999-2012). How to Calculate Comparatio. eHow Money: Business. Retrieved November 29, 2012 from http://www.ehow.com/how_5102023_calculate-compa-ratio.html Farlex. (2004). A systems approach to organizational effectiveness: the alignment of critical organizational dimensions. The Free Library. Retrieved November 22, 2012 from http://www.thefreelibrary.com/A+systems+approach+to+organizational+effectiveness%3a+the+alignment+of...-a0121714160 Glendale. (2012). Glendale municipal code: chapter 3.04.220. City of Glendale Municipal Code. Retrieved from http://www.ci.glendale.ca.us/gmc/3.04.asp#3.04.220 Ingram, R., Albright, T. Hill, J. Managerial Accounting: Information for Decisions, 3 ed. South-Western. Maine. (1999). "Redline" Salary. State of Maine Bureau of Human Resources. Retrieved November 16, 2012 from State of Maine website: http://www.maine.gov/bhr/rules_policies/policy_manual/10_3.htm McNamara, Carter, MBA, PhD. (2005). How to Minimize Legal Liabilities and Risks. Field Guide to Consulting and Organizational Development. Authenticity Consulting, LLC. Retrieved September 13, 2011 from http://managementhelp.org/misc/minimize-consulting-liabilities.pdf Pendergast, M. (1999-2012) Employment Laws in Washington State. eHow.com. Retrieved December 11, 2012 from http://www.ehow.com/list_7166759_employment-laws-washington-state.html#ixzz2EE1KX3iZ Ojimba, E. (2005). Salary Basics: Pay Structures. Salary.com. Retrieved December 11, 2012 from http://www.salary.com/advice/layouthtmls/advl_display_cat14_ser65_par142. Salary Editors. (2011) Assessing the Competitiveness of Employee Pay. Compensation, Topic: Salary. Salary.com for Business. Retrieved December 11, 2012 from http://business.salary.com/assessing-the-competitiveness-pay/ Schrader, J. (2012). Y-RATING: 400-plus earn tens of thousands more yearly. The Olympian. Published April 30, 2012. Retrieved December 11, 2012 from http://www.theolympian.com/2012/04/30/2086967 Stillman, J. (1999-2012). Washington State Laws on Wrongful information. eHow.com. Retrieved December 11, 2012 from http://www.ehow.com/info_8226398_washington-state-laws-wrongful-termination.html USOPM. (2012). Learning About the RIF Regulations. Summary of Reduction in Force under OPMs Regulations. United States Office of Personnel Management. Retrieved December 11, 2012 from http://www.opm.gov/rif/general Volden, C. (2006). States as policy laboratories: Emulating Success in the Childrens Health Insurance Program. American Journal of Political Science, 50(2) Washington State Human Resources. (2012). Rules: Y-Rate Definition, Causes, and Considerations. Retrieved December 11, 2012 from http://hr.wa.gov/rules/Pages/Y-RateDefinition,Causes,Considerations.aspx Ways & Means. (2012) Senate Bill Report No. 6591.Senate Committee: Failed Retrieved December 11, 2012 from http://apps.leg.wa.gov/documents/billdocs/2011-12/Pdf/Bill%20Reports/Senate/6591%20SBR%20WM%2012.pdf WPEA. (2012). About the WPEA: History. Washington Public Employees Association, Retrieved December 11, 2012 from http://wpea.org/about/wpea-history.html. Wise, L. R. (2002). Public management reform: Competing drivers of change. Public Administration Review, 62(5), 555-567. Retrieved December 11, 2012 from http://www.jstor.org/stable/3110016 Tables and Illustrations Cover Page: Clearance Photo. How to Write a Letter to Ask for a Raise in Pay. eHow.com. Retrieved December 10, 2012 from http://www.bing.com/images/search?q=raise+letter+pictures&view=detail&id=EB4DEFE5D320DA3FB8341810A8E520A2FCC1B65A&first=193 USOPM. (2012). SALARY TABLE 2012-GS. United States Office of Personnel Management. Retrieved December 11, 2012 from http://www.opm.gov/oca/12tables/html/gs.asp EXCEL. (2012). Current Y Rated Employees. Washington State Human Resources. Retrieved from www.hr.wa.gov Washington. (2012) History of Washington Minimum Wage. Washington State Department of Labor & Industries. Retrieved December 11, 2012 from http://www.lni.wa.gov/WorkplaceRights/Wages/Minimum/History/default.asp Whistleblower/Congress. (2012). 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