Peck discusses salary program for FY11

Diane Peck, vice president of human resources, has announced that there will be a staff salary program for the 2011 fiscal year, effective Sept. 1, 2010.   She discusses with Stanford Report the importance of the program as a cornerstone of Stanford's performance management process.


Why did the campus make the salary program a budget priority?

The past year has been a difficult one for all of us at Stanford.   In 2010, staff members did a remarkable job handling the challenges presented by our campus wide budget reductions, which included a salary freeze, staff reductions and other extraordinary measures.  It is important that the university be able to recognize these many employee contributions, even in financially challenging times.  So I'm very gratified to be able to announce that we will have a staff compensation program in the coming fiscal year.


How will the salary program work?

Like our prior salary programs, the 2011 compensation program will maintain an emphasis on recognizing individual performance.  Whenever the university provides funding for base-salary increases, it is based on merit.  There is a direct link between performance and compensation.  Stanford's pay-for-performance philosophy calls for substantial differentiation in merit awards; that is, employees whose contributions are significant should receive monetary rewards proportionately greater than those awarded to employees who contribute to a lesser degree.  Employees performing at unsatisfactory levels do not receive merit increases.


How is merit determined?

Stanford's performance management process is grounded in ongoing, two-way communication between each employee and his/her supervisor about job expectations and how those expectations are being achieved.   An effective performance management process is key to achieving a high-performing and positive work environment where managers provide the motivation and encouragement that is needed to retain employees, as well as honest feedback and coaching to help employees who are not meeting performance expectations.


How did freezing last year’s merit program impact our overall standing in the labor market?

Our decision to freeze merit pay was in line with actions taken by the majority of U.S. employers in response to tough economic conditions.  Many employers went further and instituted pay cuts.  Stanford continues to conduct annual market studies to evaluate our competitiveness.  Recent studies show that despite fluctuations in market pay for certain types of jobs, Stanford’s overall position in relation to other Bay Area employers remains competitive.  It’s also important to note that effective Sept. 1, 2010, Stanford’s pay ranges will be adjusted upward to support continued growth in salaries. 


How do benefits costs affect our salary program?

A: In addition to our base salary program, we also provide very generous benefits programs.  The cost of these programs is part of our total compensation package and, as the benefits component increases, our ability to grow the salary component is diminished.  In recent years, the university's contribution to benefits has grown faster than salaries.  As an example, over the past five years, the university’s contribution to fund each employee’s health plan has increased by an average of 9% per year, and these increases show no sign of abating in the future.


When will employees learn the outcome of the salary process?

All departments have begun to prepare salary increase proposals for their staff employees for fiscal 2011. Deadline for performance reviews and resulting salary decisions vary from unit to unit within the university, but most planning activity will be completed within the next few months, with many increases effective Sept. 1, 2010 -- the beginning of the new fiscal year.  Timing for when individual employees will be informed of final decisions regarding their pay varies, since each school or vice presidential area is given a great deal of freedom to administer and communicate its staff salary program within university guidelines.