Town Hall Presentation January 9-10, 2002 Curtis Powell Vice President for Human Resources The Division of Human Resources and William M. Mercer, Incorporated

2 Todays Town Hall Objectives 1.Meet the Project Team 2.Discuss why Rensselaer launched this initiative 3.Discuss why Mercer was selected 4.Review the Project Plan 5.Show our progress to date 6.Discuss what this means to you 7.Answer questions

3 Objective #1: Meet the Project Team

4 The Project Team Curtis PowellRensselaer VP, Division of Human Resources Anne BilynskyRensselaer Manager, Compensation Kathy McNamaraRensselaer HR Specialist Kimberly KeatingMercer Senior Consultant Dr. Andrew KleinMercer Higher Education Practice Leader

5 Objective #2: Discuss why Rensselaer launched this initiative

6 Where We Want to Be Develop a total compensation system that will guide the design, implementation, and administration of your compensation program(s). It will ensure that job performance, compensation levels, and training programs are aligned with the Rensselaer Plan and your Divisions/Schools Performance Plan.

7 Developing the Total Compensation System In partnership with Mercer, Rensselaer will develop the following: Compensation Philosophy & Strategy Staff Compensation Program Faculty Compensation Program Variable Pay Program Implementation Process & Supporting Communication & Training Materials The Rensselaer Plan

8 Objective #3: Discuss why Mercer was selected

9 William M. Mercer, Incorporated Mercer consultants: Offer years of experience and have developed and implemented compensation systems in higher education. Offer years of experience and have developed and implemented compensation systems in higher education. Have access to vast data resources: Have access to vast data resources: Worlds largest human resource consulting firm, with annual revenue of approximately $2.0 billion Worlds largest human resource consulting firm, with annual revenue of approximately $2.0 billion More than 13,000 employees More than 13,000 employees 136 cities 136 cities 40 countries 40 countries Will work as a team with the Division of HR to design the best program for Rensselaer Will work as a team with the Division of HR to design the best program for Rensselaer

10 Objective #4: Review our Project Plan

11 STEP 1 - Compensation Philosophy and Strategy Development STEP 2a - Faculty and Staff Base Pay and Compensation Program Design Begin project; start to learn issues, philosophy, business and strategic plan Develop compensation philosophy and strategy and communication strategy; identify benchmark jobs Interviews leadership to understand expectations, gain perspective, ascertain desired outcomes Develop, test and finalize slotting methodology for non- benchmark staff jobs Develop base pay structure scenarios for staff jobs and competitive ranges for faculty jobs Conduct competitive market assessment of base and total cash compensation for 250 benchmark staff and faculty jobs Project Plan STEP 2b - Variable Plan Design Develop plan; design straw model; rewrite reaction models Develop variable pay program goals, culture issues, and funding limits Build plan documents for program; review costing to ensure affordability

12 STEP 3 - Program Costing Cost program alternatives, finalize approved designs Place non-benchmark faculty and staff in grades based on job evaluation and career ladder structure STEP 4 - Recommendations for Implementation Obtain Presidents approval to proceed Present recommendations to the President and Members of the Presidents Cabinet STEP 5 - Training STEP 6 - Implementation - July 2002 Develop and implement compensation policies and procedures and administrative guidelines Identify internal adjustments and finalize titling standards Begin training supervisors and informing faculty and staff of new program Begin Implementation Structure Titles Career ladders Project Plan

13 Objective #5: Show our progress to date –Research –What we learned –Status

14 Research Findings are based on information gathered through: Meetings with President Jackson, key leadership, faculty and staff Meetings with President Jackson, key leadership, faculty and staff Analysis of faculty and staff compensation data and the external marketplace Analysis of faculty and staff compensation data and the external marketplace Review of Rensselaers communications, internal published materials, and manuals Review of Rensselaers communications, internal published materials, and manuals

15 Research Review of individual performance management tools and/or job descriptions across the Institute Review of individual performance management tools and/or job descriptions across the Institute Working sessions and focus groups with staff and faculty representatives at Troy and Hartford Working sessions and focus groups with staff and faculty representatives at Troy and Hartford Division presentations Division presentations Analysis of best practices in higher education, not- for-profit, and for-profit organizations Analysis of best practices in higher education, not- for-profit, and for-profit organizations

16 What we learned... There are inconsistent messages about what is important. Study Finding # 2 Study Finding # 1 There is no Institute-wide, systematic approach for administering staff compensation. A number of systems have been developed across the campus on an ad-hoc basis.

17 What we learned... The faculty have established titles and career movement criteria that correspond to pay. A benchmarking study will assess current practices. Study Finding # 4 Study Finding # 3 Career paths are not well defined for most staff job families.

18 What we learned... The performance standards for faculty and performance management tools for staff are still being integrated into the total compensation system. Study Finding # 6 Inconsistent job titling is creating internal equity issues. Study Finding # 5

19 What we learned... There is a prevailing view that most people are underpaid. Based on a preliminary staff assessment, 80% of staff are within the competitive range of their position. Study Finding # 7 Rensselaer does not have a systematic way to attract and retain world- class faculty. Study Finding # 8

20 Status We have preliminarily defined our target markets as follows: * Geographic differentials calibrate the data for Troy and Hartford

21 Status We are in the process of finalizing the following ladders: Management Career Ladder Management Career Ladder Professional Career Ladder Professional Career Ladder Information Technology Career Ladder Information Technology Career Ladder Administrative Support Career Ladder Administrative Support Career Ladder Research/Scientific Career Ladder Research/Scientific Career Ladder

22 Status

23 Immediate Next Steps Finalize staff career ladders Finalize staff career ladders Complete the development of staff pay structures Complete the development of staff pay structures Refine staff titles Refine staff titles Continue/complete faculty external market analysis Continue/complete faculty external market analysis

24 Objective #6: Discuss what this means to you

25 The New Rensselaer Total Compensation System Salaries are going to be managed within a system. Every position will be placed in a salary grade with a defined minimum and maximum. Salaries are going to be managed within a system. Every position will be placed in a salary grade with a defined minimum and maximum. The salary system will be based on analysis of the external marketplace and an assessment of the unique value system at Rensselaer. The salary system will be based on analysis of the external marketplace and an assessment of the unique value system at Rensselaer. Defined career paths will help staff map out their career strategies. Defined career paths will help staff map out their career strategies. Fairness Competitiveness Career Opportunities

26 The New Rensselaer Total Compensation System Titles will be revised to reflect the new system and to ensure that they are consistent across the Institute. Titles will be revised to reflect the new system and to ensure that they are consistent across the Institute. Regulatory Compliance Labor regulations require that with a new/revised program of pay and rewards we conduct an audit to ensure continued compliance. Labor regulations require that with a new/revised program of pay and rewards we conduct an audit to ensure continued compliance. Title Consistency

27 Objective #7: Answer questions

28 Questions & Answers