Five Ways to Enhance the Effectiveness of HR Design

This fall marks my ninth academic year at UW–Madison. During my time here I’ve experienced our human resources system in many ways—as a new mother seeking a maternity leave (twice), as a temporarily disabled employee in need of a leave, as a frustrated faculty member seeking a raise, and multiple times as the director of a large research project trying to hire and retain qualified classified and academic staff. I know firsthand that the system needs to change in order to realize our campus goals of equity, efficiency, and effectiveness.

That is why I have taken seriously the HR Design team’s request for input from shared governance units, spending significant time studying the plan, and commenting on it in multiple venues. I think further adjustments to the current plan are required, because my own knowledge of higher education reform efforts and the scholarly literature on work and organizations suggests that as currently formulated it will have significant unintended consequences, eroding some of what we value most about our university. Therefore, I am providing five recommendations for revising the plan so that UW–Madison’s approach to the management of human resources continues to reflect an ethos that prioritizes egalitarianism over ego, and recognizes that our greatest resource is our communal passion for and commitment to our work, rather than the competitive yet aimless striving for prestige that has overcome many of our peer institutions.

Recommendation 1:Expand the plan’s current living wage provisions to include workers at businesses receiving university contracts of $5,000 or more and student hourly employees.

The current plan calls for the implementation of a living wage policy that omits two groups: student hourly workers and contracted employees. Including contracted employees would bring the policy in line with the City of Madison’s living wage provisions. Their exclusion creates an incentive for the university to outsource more functions, which may increase efficiency but will also erode job security. In addition, providing a living wage to contractors and students helps ensure at least a modicum of equity among all people working in our community.

           

Recommendation 2: Revise the compensation philosophy guiding the plan to make internal equity and collective performance the primary, rather than secondary, compensation drivers.

The current plan repeatedly emphasizes enhancing “individual potential, opportunity, and achievement,” which, while important, overlooks the critical role played by teamwork in providing high-quality learning experiences and producing innovative research. The 21^st century research university increasingly requires collaboration across disciplines and units, creating work environments where people trained in different disciplines (and who are thus part of different labor markets) work alongside each other. The plan briefly acknowledges this, but the compensation strategies it outlines focus first on the role of market competitiveness (noting that it will be a factor in establishing compensation) and only secondly (and far less frequently) on internal equity. The roles of these factors should be reversed in each section. After all, the compensation work team (which, as an aside, did not include any non-administrator faculty members) recommended that market value be considered in setting wages but said nothing about de-valuing or de-emphasizing equity (although it appears the committee did not consider alternative, equity-focused models of compensation at all). It is reasonable that the committee wanted to add market-based pay to the mix of compensation drivers. However, the extent to which this driver should be emphasized, and how to assess cross-departmental collaborations taking into account diverse disciplinary “markets,” are very complex questions deserving a more careful work.

Recommendation 3: Require mandatory training for all managers tasked with setting employee compensation and/or benefits.

Given the highly decentralized nature of the plan, managers will almost always be faculty members, and yet most would acknowledge that they are not trained for or comfortable with performing human resources functions. The compensation work group noted this among its concerns, stating, “Another concern is that not all faculty and staff supervisors will assume responsibility to fairly, objectively and consistently implement formal performance evaluation processes.” This is too important a role to be left to the untrained, but the efficacy of this plan relies exclusively on their responsible participation in the training. It is especially important to give managers guidance about how to conduct and utilize market analyses in departments and units where scholars from different disciplines work side by side (thus creating much potential for internal inequity), and also to train them in assessing the comparable worth of similar yet unequal tasks. The current plan notes that a lack of training for managers was named as a problem in the listening sessions and mentions the training of hiring managers, but says nothing about rigorously training those who set compensation.

Recommendation 4: Alter the recommendation in the plan associated with shared governance to focus on joint decision making rather than advice and input.

The recommendations on shared governance, particularly with respect to development of the compensation pay plan and changes in benefits (leave, insurances, etc.) stress that the shared governance institutions, specifically that of the newly created University Staff, provide advice and input to the administration afterthe plan is developed. This is not indicative of a collaborative or shared governance model. While at many institutions shared governance merely requires the involvement of faculty, staff, and students as listeners and occasional speakers, this is not the historic practice at Madison and shared decision-making responsibilities should not be eroded through changes to language in specific plans like these.

Recommendation 5: Require mandatory performance reporting and accountability metrics for the new HR System.

At minimum, the plan should explain which reports should be produced and what consequences will be associated with performance. For example, public annual reports should assess changes in internal equity (between faculty and staff, among groups with regard to gender and race), faculty and staff turnover, and the absolute and relative number of positions that are university employees versus contractors. These reports should be presented to both the Faculty Senate and the Academic Staff Assembly (and the shared governance body of the University Staff), and the senior leadership council should describe what responses to the plan will take place should inequity, turnover, outsourcing, or other negative unintended consequences of the new HR design emerge or worsen.

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Equity, Performance, and Employee Compensation

Every employee at UW-Madison believes they deserve to be paid more, and the vast majority are right. It's time we recognize and begin to address the fact that most workers across Wisconsin are underpaid--in UW and far beyond. Increasing compensation for everyone in the bottom half of the income distribution should be a state and national priority, especially given the evident and long-lasting consequences of widening income inequality.

Unfortunately, the HR Design plan at UW-Madison is nearly silent on the issue of raising compensation for all currently underpaid employees. Instead, it focuses on how compensation levels will be determined and how raises will be distributed when money is available.  It does nothing whatsoever to make sure more money is available. Remember that-- don't allow the desire for more pay to lead you to blindly accept the terms of a plan that doesn't bring more pay but rather changes the terms on which you are paid.  

The biggest change related to compensation in the HR Design is the new and explicit attention to "market competitiveness" in setting compensation levels and determining raises. This is a response to the status quo, which has been identified as a problem with this statement:

"State law prohibits UW–Madison from giving unclassified employees performance-based pay raises unless they are part of an annual pay plan—and there has not been a pay plan in four years" (p. 24).  

What exactly is the problem?  Is it that performance pay cannot be given outside of annual pay plans? Or is it that there hasn't been a pay plan in 4 years? These are two separate issues, and should be tackled separately.  The first is about pay equity, and the second is about the consequences of austerity agendas.  Current discussions conflate these issues-- employees are upset about the lack of a pay plan and thus some are desperate to agree to anything that leads to pay, for anyone, no matter the consequence. That's a recipe for disaster.

It seems the HR team has concluded that the former issue must be addressed and therefore proposed mechanisms for awarding performance pay even in the absence of a pay plan by calling for a model that "balances market competitiveness and internal equity."  Essentially, instead of developing a new model for UW-Madison that leverages scarce resources for fair and humane treatment of all employees, this model opens the door to further growth in salary inequities across and within units.  It does this by promoting salary increases based at least partly on market competitiveness without explicitly requiring attention to internal equity, as part of both the compensation philosophy and the roles and responsibilities of managers.

The reasoning provided for this approach is fallible. We are told that employees want their pay based on market competitiveness-- yet the survey questions utilized in the employee polls ask about these issues in isolation. A better approach would ask employees to rank their preferences-- a pay plan distributed equitably, with some additional pay for performance; pay distributed inequitably, with no overall pay plan provided, etc. In other words, when presented with a false choice, it isn't at all surprising that employees choose to protect themselves. But what we're given here isn't our only option.

A review of extant research leads me to conclude that pay for performance has uneven effects in environments like UW-Madison. The main issue at Madison and across Wisconsin is that pay levels are low-- not that they aren't tied to performance.  Tying pay to a combination of performance and equity will reduce, not enhance, the transparency of the compensation process, and thus likely increase the sense of injustice that already pervades campus.  Basing pay on an unspecified assessment of market value will lead employees to feel even more left out of the process, making them even unhappier. In other words, it is likely that HR Design will do nothing to improve the feelings among UW employees that their compensation levels are unfair and inappropriate.   It may even make things worse.

As an alternative, I therefore propose the following revisions to the HR Design's compensation plans:

(1) Make internal equity a priority in the setting of compensation by describing it as an explicit priority central to the compensation philosophy and part of the compensation function's roles and responsibilities.  Educational institutions are unique environments that place a priority on collaboration, including across disciplines, and it is for the good of our teaching and research at UW-Madison that we be allowed to prioritize internal equity when distributing any and all forms of compensation.  This is an essential revision of state statutes and one we should fight for.

(2) Clearly define the terms "market," "performance," and "merit" in the plan and delineate among them. Be clear, which types of pay result in base increases, and which do not?

(3) Provide explicit guidance to managers working with employees who work across units or in interdisciplinary settings. These areas are where pay based on markets are likely to do the most harm - imagine the sociologist teaching alongside the economist in the same department, where the latter professor (most often a male) out-earns the former (usually a female) 2 to 1. It happens under our current system, and is demonstrably counterproductive. These are the types of problems we can and should fix in order to enhance our ability to retain workers and ensure their flourishing.

(4) Include all employees-- included contracted employees--in the plan to provide a living wage.
 The only people who will clearly benefit from HR Design in terms of current base pay are those at the bottom of the pay scale who will remain university staff and will now receive a living wage under this plan.  The number of people meeting that description is not mentioned in the plan.  That number should be considered in relation to the likely number of jobs that are currently university staff jobs and will instead be contracted out to save the university money. The City of Madison pays living wages to all contractors on contract over $5,000.

UW-Madison should take the lead in reducing income inequality in Wisconsin, not exacerbating it. We are national leaders when it comes to our collective devotion to our work, and that strong intrinsic motivation should be leveraged whenever and wherever possible.  No, it should not be exploited--as it now is-- to justify underpaying us. But do not let the poor practices of our neighbors compel us to lose what's great about our community--we have no desire to become a "winner take all" society.

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