Salary Adjustment FAQs

What is market and compression adjustment?

When you are notified of your raise, typically everyone gets the same percentage across-the-board raise, but in many cases there will be a raise for other factors: market, performance, compression, and/or promotion. Here we're talking about the market and compression components. The contract typically allocates a small percentage of each year's raise to market and/or compression adjustments. Market adjustments are intended to bring salaries up towards national averages for each discipline, and so are allocated according to how far faculty fall behind national averages for their rank and discipline. Compression adjustments are intended to deal with cases where salaries of more recent hires or of lower rank have risen close to the salary of someone of higher rank or who has been here for a longer time, for reasons that cannot be attributed to performance differences.

How is it decided who gets market raises, and how much they get?

The point is not to make salaries the same, but to make them rational. So, once negotiations with the Administration produce a contract with percentages targeted at market and compression adjustments, the task is to identify systematic patterns of below-average salaries and use systematic means to bring them up towards national averages, without getting into questions of individual performance. This is done by measuring how far behind national averages each rank in each department is for their field, comparing departmental averages to national data. For all faculty except Extension and Library, this data comes from an annual survey conducted at Oklahoma State University. (The data is from everywhere in the US, not just Oklahoma, but the survey is referred to as OSU.) Extension data comes from the USDA's "Salary Analyses of Cooperative Extension Service Positions" and Library data comes from the ARL Annual Salary Survey. We also use a procedure to adjust averages if others in their rank and department have especially high salaries.

There has never been enough money allocated by the negotiated contract to get everyone up to national averages, so procedures have to be developed to distribute what limited amount we have. Basically, average salaries for each rank within each department are compared to OSU averages, and the amount of money it would take to bring people in that rank up to national averages is determined. (Because of the nature of the data, Library is treated as one department, and Extension faculty are distinguished by highest degree and field vs. campus instead of academic discipline.) Next, we see how much money there is that can be devoted towards that difference: in FY11, for example, we had enough to make up 21% of the gap between a department's salaries and national averages; in FY07, it was 33%; in FY09, it was 10%. In FY11, therefore, eligible ranks and departments thus received a market raise equal to 21% of the amount they were behind OSU averages, up to the cap (which was $2,600 in FY09, the maximum allowed by the contract ratified in Sept. 2008). The money is spread out in proportion to salary, so people with higher salaries in a given rank/department get a slightly higher market adjustments.

What are the principles behind all this? What is the UA approach?

Since its first contract with the Administration, UA has followed a consistent approach, made up of three goals and four principles. The goals are:

Bring all faculty at least up to national averages at comparable institutions for their rank and discipline. This will improve UVM's ability to attract and retain high-quality faculty. We currently are far behind in many units (but not all).
Close the gap over a period of years, giving more funds to groups more behind national averages at comparable institutions.
Conduct the analysis for groups made up of all faculty in a rank and department, rather than for individuals. Differences in salaries within ranks and departments might reflect performance adjustments over time. It is not our intent to reverse these judgments, but to deal with a structural problem affecting the whole faculty.

The principles are:

Years in rank: Make the system sensitive to the length of time a faculty member has been in rank. A full professor who was tenured last year should be treated differently from someone who has been a full professor for 20 years.
Caps: Cap maximum adjustments at a fixed rate. (In FY11, we capped at the maximum allowed by the contract, $2,600.)
Compression: Focus compression adjustments on contract-caused compression (instead of, say, compression caused by what might be a "star" faculty member, which gets into questions of performance.) The most common kind of contract-caused compression in the past has come from the effect of salary minima in the first contract, which automatically bumped up the salaries of newer hires in lower-paid departments to levels close to those of their colleagues who had been in rank for many years; compression adjustments were allocated to try to maintain salary distinctions in those departments. In recent years, the entire pool has been allocated to market, rather than compression, adjustments.
Outliers: A few academic departments have one faculty member with an extremely high or low salary (at least 1.5 standard deviations away from the mean for the department-rank). These outliers are excluded from the market comparisons, so as to not give one anomalous salary influence over the rest of the department's market adjustments.

I want more details on how this works.

OK, here's a step-by-step overview:

Get data. Whenever it is time to conduct the market and compression analysis, the UA Salary Committee gets data about UVM faculty salaries and national salaries from the Administration and conducts an analysis using a spreadsheet. A database of current salaries broken up by department and rank is constructed. (It includes Chair salaries, because these are included in the OSU data.)
Adjust for years-in-rank. UVM department/rank salaries are adjusted for years in rank, and an average salary is determined "as-if-average-years-in-rank." If all the associate professors in a department were newly tenured, for example, the adjusted average salary for that department would be higher than the actual average salary; if all the associate professors had been in rank for 12 years, the adjusted salary would be lower than the actual average. One would expect newer faculty members to be paid less than those who had been in rank for many years; the adjustment thus allows for more of an apples-to-apples comparison with national data. The years-adjusted salary level is the estimate of the salary for that group if faculty members had an average number of years in rank. Based on a regression analysis by Prof. Elaine McCrate, we assume that a year in rank at UVM typically returns one percent of a gross 9-month salary.
Identify and correct for outliers. There are a few cases in which relatively high salaries of some faculty members might raise the average of a category to prevent others in their group from getting market adjustments, even though all the others are substantially below average. In other cases, one extremely low salary could benefit other members of the group whose salaries are not markedly low. We delineated these cases by using the spreadsheet to flag individuals that were more than 1.5 standard deviations away from the mean in their department/ranks. In these cases, we could recompute the department/rank average by assuming that the highly paid faculty was paid at one standard deviation from the national average. This way, adjustments are not disproportionately affected by one outlying salary.
Develop a dollar number. Use the calculations already developed to determine a dollar amount by how much each dept./rank category is behind the national averages of our comparison schools. This varies a lot from department to department and rank to rank.
Determine what percentage of the gap can be met. The contract specifies a certain percentage of the overall raise that can be given to compression and market; this is a specific amount of money (in FY11, for example, when the market/compression component was 1%, just over $435K was available for General Fund faculty, and just over $15K for Extension faculty). At this point, the Salary Committee must determine what our salary target should be, which in recent years has ranged from 103% to 106% of the OSU national average. The Committee also decides on where to set the salary adjustment cap (in FY11 it was set at the maximum allowable $2,600), and based on these parameters, we set the percent of the gap that can be adjusted with the pool of funds available.
Assign adjustments. The spreadsheet then assigns adjustments to each faculty member accordingly. Adjustments are capped at $2,600, and a minimum is set at $200 (so that if the calculated adjustment is below $200, the spreadsheet adjusts up to $200). Adjustments within a rank/category group are slightly adjusted according to an individual's salary, to preserve distinctions within a rank/dept. group. Finally, adjustments are multiplied by an individual's FTE; a person who is due a $200 adjustment and has a .50 FTE appointment, for example, would get $100.

Who thought all this up? What's the history of the market adjustment?

The techniques of market adjustment are almost entirely the work of Prof. Ross Thomson, who was United Academics' Vice President and who served as chief negotiator for our last contract. In the 1990s, the Arts and Science's Dean's office sought ways to start bringing faculty up towards national standards in an even-handed, rational way. Prof. Ross Thomson, who was then an A&S Associate Dean, began developing spreadsheet-based mathematical comparative measures that could systematically measure how far particular people were behind and allocate market raises accordingly. When United Academics signed its first contract, Prof. Thomson was involved in the Executive Council, and so he was able to take the methods he had developed in A&S, refine them, and apply them to all faculty in the bargaining unit.

How is it decided what group of schools we compare ourselves to determine what's average? Can this change?

There is no scientifically perfect way to determine our comparison group. On the one hand, there are practical limitations. For example, we compete with mid-sized private universities for students and faculty and are in many ways a quasi-private university, but data broken down by discipline is not available for them, and so we cannot include them. On the other hand, because this is about shaping salary structure in the future, choosing a list of competitors is as much a matter of future direction as it is about current conditions; it is about who we want to be as much as it is about who we are. So part of how we determine a comparison group is to make it consistent and supportive of the UVM Vision, and the stated goals of President Fogel to make UVM "the premier small public research university in the country."

While in the past we have used 100% of OSU as the target for comparison, OSU includes schools that are clearly not our competitors such as Cleveland State. When we were far behind, this was a serviceable practice, but as we slowly creep towards national averages, the presence of schools that are clearly not our competitors in the database might have excluded faculty from getting market adjustments when they are well behind their national markets. Our first effort was to come up with a more precise measure of how we should define market averages, but we were not able to reach an agreement with the Administration about an appropriate comparison group. As an alternative, for FY07 we used 103% of OSU as a rough approximation of our true market; in FY08 we used 105% and in FY09 106%.

We will be talking to the Administration in the coming years to develop procedures for dealing with this in the future.

Why do lower-paid people sometimes get less market adjustment than people who are paid more?

Again, the goal of the market adjustment is rationality and competitiveness, not equality in pay. So a number of circumstances can sometimes lead to market raises being higher for higher paid faculty. For example, a person in a field that is poorly paid nationally may get a small market adjustment while someone in a highly paid field who makes much more will get a larger one. Similarly, a number of full professors at UVM are farther behind national averages than their junior colleagues, so even though as fulls they are paid more already, they also sometimes get larger market adjustments. Also, the market adjustment method is designed to bring rank/dept. groups up towards averages, while preserving existing differences within those rank/dept. groups. If each faculty member in a rank/dept. group, (e.g., all associate professors in Dept. X) got the exact same market adjustment, differences between these faculty might decline over time. (Other factors in the contract can narrow the relative gap, including minima, promotion increases, and flat dollar amounts for performance adjustments.) The market adjustment method, therefore, is designed so that within each group, those with higher salaries get slightly higher adjustments than those with lower salaries. (The formula is: Individual's base pay divided by average base pay, and then multiplied by amount behind national average.)

Shouldn't people be paid according to their performance, and not just according to some formula?

The contract does include money to reward performance in FY011, and requires that faculty get substantial, specified raises upon promotion. Market adjustments intend to solve a different problem: that whole groups of high-performing faculty are behind national averages. The idea of the market adjustment system is not to make everyone paid the same. It is to make the salary system rational. It is thus designed to preserve performance distinctions within a department/rank category. It operates from the assumption, though, that the cause of low salaries at UVM is not just that most of the faculty are not worthy; some effort to bring the entire faculty up to national averages is warranted.

It is worth mentioning that United Academics supports the principles of performance and peer review, and has in a variety of ways worked hard to protect professionalism and high scholarly standards. The contract also allows Chairs and Deans to grant raises "for the purpose of matching or exceeding bona fide written offers from other institutions, adjusting for anomalously low salaries or for rewarding professional contributions to the University of an extraordinary nature."

My colleague makes a lot more money than I and has been working here for about the same time. It's not fair. Can the union fix that?

Market adjustments aim to solve a structural problem: that salaries for whole groups are too low, either because the whole group lags behind national norms or because incoming faculty are paid more than faculty in the same department who have been employed for a longer time. Our goal of transparency and objectivity requires that we use uniform formulae. This will not address past differences in salaries, whether fair or not. By our procedure, faculty know that salary decisions treat each faculty by the same principles and so are fair and clear. Over time the overall faculty salary structure at UVM will gradually move in the direction of being less ad hoc, more rational, and closer to national averages than it has been in the past.

Professionals in my field make much more money than I do; my students go on to make more money than me after a few short years of work. Can the union do something about this?

The union works hard to improve the salary situation at UVM in general, and as part of a national movement, we are working to protect and improve the status of academics overall. But for the purposes of market adjustment, the "market" we compare ourselves to is other academics at research universities, not to professionals working outside academia.

How do the Union's procedures change over time, and can I help shape them?

The Union's procedures respond to real problems, and do change over time. We introduced years in rank in the calculations because of input from union members. We are now considering whether the entire OSU study is the appropriate comparison for UVM faculty, or if some group of more comparable institutions might work better. Likewise, we have worked with Library and Extension faculty to determine the best procedures for market adjustments in their units. We welcome input to improve the adjustment process, and those interested in serving on the Salary Committee in the future should contact Jenn Strickler. Other members of the Salary Committee for FY11 were David Novak, Assistant Professor of Business; Sheila Weaver, Senior Lecturer in Mathematics and Statistics; and Karla Karstens, Senior Lecturer in Mathematics and Statistics.

Who do I contact if I have questions or concerns about market and compression adjustments?

The current Chair of the Salary Committee is Jenn Strickler (Jennifer.Strickler@uvm.edu).