p. 1

human resource management manual this manual has been designed to provide agencies the basic tools and resources needed to administer their agency s human resource program under compensation reform the content of this manual should not be construed as policy rather it should be used in conjunction with the human resource policies developed by the department of human resource management dhrm compensation reform is an evolving system and therefore policies procedures practices and processes will emerge throughout the commonwealth and within the various agencies as agencies develop their agency salary administration plans agency-specific components of compensation reform will unfold this manual represents the program characteristics of compensation reform as they have been developed dhrm is committed to updating this manual as policies procedures laws federal regulations and trends in compensation management change and to provide consultation and technical assistance to agencies in the administration of this and related publications.

[close]

p. 2

human resource management manual table of contents overview chapter 1 chapter 2 chapter 3 chapter 4 chapter 5 chapter 6 chapter 7 chapter 8 chapter 9 chapter 10 compensation reform overview authority and responsibilities program evaluation compensation philosophy job organization and salary structure job evaluation career group studies pay practices revised 3/01 differential and supplements new 3/01 salary survey section one ­ compensation management section two ­ recruitment selection chapter 11 recruitment guidelines under development section three ­ employee recognition chapter 12 rewards and recognition new 3/01 section four ­ performance management chapter 13 performance management section five ­ employee development chapter 14 employee development under development section six ­ legal issues chapter 15 fair labor standards act under development 02/16/01

[close]

p. 3

appendices appendix a appendix b appendix c appendix d appendix e appendix f appendix g appendix h appendix i appendix j appendix k appendix l appendix m appendix n agency salary administration plan and agency compensation reform transition planning checklist report reform of the classified compensation plan employment statuses appeals employee work profile competency-based systems skill-based systems development of career group descriptions and example of career group description exceptional recruitment and retention incentive options new 3/01 survey summary data sample under development turnover rate computation and usage under development sample salary survey format under development non-base pay options chart new 3/01 glossary 02/16/01

[close]

p. 4

chapter 1 compensation reform overview commonwealth of virginia s compensation management system introduction in 1998 the commission on reform of the state compensation plan was formed to recommend modification to the commonwealth s classified compensation plan the need to reform the state s compensation and classification system was formally recognized by the 1994 workforce commission the 1998 commission adopted and refined the objectives of the 1994 workforce commission and developed a new compensation plan for the commonwealth the new system reflects contemporary human resources practices used by many public and private employers and is designed to meet the on-going needs of the agencies in effectively fulfilling their missions and delivering services to the citizens of the commonwealth the commission s findings and recommendations are presented in the january 14 2000 report entitled report reform of the classified compensation plan see appendix b the governor and the 2000 session of the virginia general assembly approved the commission s recommendation to develop a new compensation management system for employees covered by the virginia personnel act covered employees include the majority of individuals employed by the commonwealth s executive branch employees not covered by the virginia personnel act include judiciary branch employees faculty employed in the commonwealth s colleges and universities employees of independent agencies employees of the virginia commonwealth university health system authority and the university of virginia medical center these employees are excluded from the new compensation management system the virginia personnel act does not cover hourly employees formerly referred to as wage employees but their pay generally is determined in accordance with the compensation management system for classified employees 1

[close]

p. 5

the change from the former system to the new compensation management system is a major one most components of the former system have been changed the new system introduces new pay practices as well as the concept of career growth while the former system emphasized the classification or evaluation of positions the new system emphasizes compensation of the employee in other words the system has shifted from assigned job duties and responsibilities to recognizing the employee s contribution to the organization from position-based to person-based additionally the new compensation management system shifts the responsibility and accountability for administering compensation policies and practices from the department of human resource management dhrm to agency management the following sections identify the major components of the new compensation management system and contrast the features with the former classified compensation plan pay philosophy previously the commonwealth s stated philosophy or goal was to pay salaries comparable to employers in the private sector in the commonwealth a new pay philosophy has been developed in the new system salaries are compared to both private and public sector organizations using local regional and national information total compensation which includes both salary and benefits continues to be used when analyzing the labor market information in the new system salary increases are based on performance entitlements such as across-the-board increases have been eliminated job organization structure the former classification plan consisted of approximately 1,650 individual job classifications which were functionally organized into 580 class series within 8 broad occupational groups included were a number of agency specific and central agency job classes in contrast the compensation management system has consolidated the job organizational structure into approximately 300 broad roles approximately 60 career groups and 7 occupational families all agency 2

[close]

p. 6

and central agency specific job classifications have been consolidated into the new job organization structure each new occupational family includes a number of career groups each career group identifies progressively higher roles within a recognized occupational field the concept of role is central to the new job structure roles describe a broad array of similar positions reflective of different levels of work within an occupational field the consolidation of the former job classes into the new broader roles helps provide greater consistency in salaries assigned to the same or similar work across the commonwealth consolidation of job structure item #occupational groups occupational families class series career groups job classes roles agency specific classes former 8 580 1,650 numerous new 7 approximately 60 approximately 300 none salary structure the former state compensation plan was a graded salary plan consisting of 23 pay grades with a 56 range spread between the minimum and maximum of each grade within each pay grade were 21 fixed pay steps that increased in a uniform percentage of 2.25 each of the 1,650 job classifications was assigned to specific pay grade pay bands the new salary structure in the compensation management system consists of 9 pay bands the first eight bands have a range spread of approximately 105 between the minimum and maximum salaries there is a 30.6 difference between the minimum salary in each pay band except between pay band 2 and 3 the pay bands are stepless that is there are no incremental steps within the band the 9th pay band specifically addresses mental health physicians that serve as either facility directors or medical directors the maximum salary of the 9 th pay band is based on the market for these positions 3

[close]

p. 7

the transition from a graded salary plan to the pay band structure is the result of a comprehensive analysis of the class specifications and a review of best practices adopted by other public and private organizations with similar pay banding structures and alternative pay practices the review included an in-depth analysis and grouping of the classifications that had similar duties and responsibilities as well as knowledge skills abilities and qualifications based on this review the most logical grouping across various occupational areas resulted in the consolidation of 3 former pay grades into each pay band with the exception of pay band 2 that only grouped 2 former pay grades 4 and 5 an additional 10 with the exception of pay band 2 which was increased by 20 was added to the maximum salary of each pay grade resulting in approximately 105 range spread for each new pay bands the salary structure conversion table is shown below salary structure conversion table of pay grade to pay band salaries as of 11-25-99 current grades 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 over 23 new r ange m inimum m aximum 12,689 26,042 r ange minimum maximum bands 12,689 13,871 15,164 16,577 18,122 19,811 21,657 23,675 25,881 28,292 30,929 33,811 36,962 40,406 44,171 48,287 52,787 57,706 63,083 68,961 75,387 82,412 90,092 19,811 21,657 23,675 25,881 28,292 30,929 33,811 36,962 40,406 44,171 48,287 52,787 57,706 63,083 68,961 75,387 82,412 90,092 98,487 107,665 117,697 128,665 140,654 4 1 2 3 16,577 19,811 34,021 40,659 4 25,881 53,116 5 33,811 69,391 6 44,171 90,653 7 57,706 118,432 8 9 75,387 98,486 154,719 market no current range

[close]

p. 8

competitive differentials a competitive differential is an extension to the maximum salary in an existing pay band and is used for select jobs based on local market conditions competitive differentials allow agencies to pay higher salaries where justified the department of human resource management dhrm must approve competitive differentials competitive differentials may apply to specific positions roles standard occupational classifications soc codes locations and/or pay areas within any agency · northern virginia differentials northern virginia differentials vary from 9 to 30 based on market data they are applied in much the same way as competitive differentials however they are not agency specific rather they are available to all agencies with positions in northern virginia for this reason separate pay band ranges are maintained on pmis for the northern virginia fp pay area sub-bands a sub-band is an identified segment of an existing pay band with a specified minimum and maximum salary within that pay band in some situations agencies may establish sub-bands to manage employees salaries within their pay bands sub-bands are not intended for application to most employees law enforcement ranks are an example of where using sub-bands may be appropriate job evaluation methodology the compensation management system will retain the position classification method or whole job approach of job evaluation to allocate positions into roles previously job evaluation was based on seven compensable factors which were complexity of work supervision exercised supervision received scope impact of action personal contact and knowledge skills and abilities the new compensation management system uses three compensable factors complexity of work results and accountability for job evaluation purposes 5

[close]

p. 9

the position classification method will determine the internal value of a job or role by comparing the job to the newly developed career group descriptions and to other jobs or roles within the organization by assigning jobs to a broader role job evaluation should be more understandable to employees and managers and less cumbersome to administer additionally external salary data will be available to help insure the jobs are properly aligned with the market the broader roles also allow agencies to develop additional job evaluation dimensions to support their agencies unique needs alternative approaches to determine job worth may include skill or competency-based systems rank structures and occupational requirements such as professional licensing or certification performance management the performance management program used in the compensation management system retains selected features of the original employee incentive pay program eipp but expands the concept of linking employee performance to pay the performance management program has been designed to insure that increases approved by the governor and the general assembly can be appropriately distributed based on the employee s performance rating the pay band structure allows for performance increases without having to change the band structure the expanded features of the performance management system include fewer performance rating levels an extended probationary period for new employees employee self-assessment and employee feedback on supervisor s performance the performance program is flexible and allows agencies to design optional features to effectively meet their agencies needs options may include group or team performance evaluations the use of numeric weighting systems and the use of performance measures based on organizational objectives 6

[close]

p. 10

comparision of changes to the performance management program item rating levels former 5 levels · exceptional · exceeds expectations · meets expectations · fair but needs improvement · does not meet expectations supervisor only none qualitative none 6 months new 3 levels · extraordinary contributor · contributor · below contributor appraisal of employee employee feedback on supervisor s performance appraisal instrument appraisal of team/group probationary period supervisor employee selfassessment upward feedback for developmental purposes provided to rater qualitative or quantitative · team/group · organization objectives · 12 months standard · management option to extend up to 18 months for performance reasons pay practices the objective of the compensation management system is to implement contemporary compensation practices that reflect best practices used in both the public and private sectors these pay practices will provide managers a mechanism to financially reward employees for their organizational contributions without having to solely rely on the traditional practices of promotion and position reallocation the pay practices available to the agencies consist of a combination of current practices that have been revised and a new practice revised pay practices include starting pay promotion reallocation role change lateral transfer and demotion the new pay practice is in-band adjustments the inband adjustment allows agencies the flexibility to provide pay increases to address such issues as internal alignment retention change in duties and professional development the focus is on variable pay increases rather than the fixed prescribed pay increases of the past supplemental pay such as shift differentials on-call 7

[close]

p. 11

and call-back will be delegated to each respective agency to manage differentials will continue to be incorporated into the system survey methodology in the past the department of human resource management dhrm annually surveyed benchmark positions and provided information to the governor and general assembly for the purpose of determining annual increases and structure adjustments in the new compensation management system accurate and reliable salary data will be fundamental to managing the compensation component of the system salary reference data on benchmark positions within each role will be provided to the agencies for use in starting pay decisions and other salary determinations agencies may continue to provide dhrm with local salary information to support their respective needs salary data in combination with other factors such as agency need budget and internal alignments will provide human resource staff and agency managers the appropriate information for managing pay decisions career growth in the past little emphasis has been placed on career growth and professional development career growth opportunities were limited to moving to the next highest job class in a class series or accepting a job in a supervisory capacity the new compensation management system will promote growth and professional development through the identification of career paths within each role as well as career progression to different roles in the next phase of development role descriptions will identify the skills and abilities required to move from one role to another and/or to a different career group expert workers will have the opportunity to advance professionally and financially without having to move to supervisory or management positions the banded salary structure allows for a dual track where supervisory and non-supervisory employees can progress through the same pay band to advance their careers with the concept of broad roles and expanded pay bands employees have opportunities for career growth without having to change positions this 8

[close]

p. 12

structure allows employees to become more knowledgeable and proactive in their own self-development and permits agencies to retain key talent management accountability the compensation management system is designed to support managers in achieving their agencies organizational mission and objectives the pay structure and practices incorporated into the compensation management system provide management increased flexibility in salary administration within their agencies the accountability for pay decisions shifts to agency s management managers will play a more active role in salary decisions this shift in accountability will result in managers having to justify pay decisions to senior management explain them to employees and stay within existing budgets the success of the pay program will depend initially on the training provided to managers and employees ultimately it will be measured by the decisions made by managers 9

[close]

p. 13

chapter 2 authority and responsibilities introduction the compensation management system is designed to permit managers a more active role in administering employee compensation to support their agencies mission and objectives there is a deliberate shift in accountability from the department of human resource management dhrm to agencies management this shift in accountability will require agencies to account for and justify the fiscal impact of payroll expenditure to senior managers explain pay decisions to employees and stay within existing budgets decisions made because of compensation reform will have both long term and recurring financial impact on agencies additionally since agencies will have available a number of different pay practice options they will be required to monitor and validate salary transactions to ensure compliance with the commonwealth s pay practices the compensation management system relies on a sound infrastructure to ensure effective program compliance and performance this infrastructure includes policies pay practices training and communications business transactions information technology support systems trends analysis and program evaluation at the state and agency levels a process of defining roles and authority and conducting program evaluation provides the critical components needed to support continued improvement of the compensation management system managing employee pay and the systems that support it is critical to the success and effectiveness of the compensation management system the administration of compensation transforms the roles of dhrm state agencies and agency managers to one of partnership requiring a balanced investment of support from each partner the purpose of this chapter is to provide guidance related to the administrative and operational management of the commonwealth s 1

[close]

p. 14

compensation management system and the authority and responsibilities inherent in an expanded partnership authority and responsibilities · governor and general assembly the virginia personnel act title 2 chapter 10 section 2.1-113 designates the governor as chief personnel officer of the commonwealth the governor is responsible for establishing and administering a compensation plan additionally the governor and the general assembly approve funding for annual performance increases that may be granted to eligible classified employees and adjustments to the pay structure · director of the department of human resource management the director of the department of human resource management is responsible for making recommendations regarding the establishment and maintenance of the commonwealth s compensation management system in accordance with authority delegated by the code of virginia dhrm promulgates policies and procedures that govern the administration of compensation for all classified employees of the commonwealth dhrm provides the governor and the general assembly with salary survey results projecting market movement in salaries and pay structure the office of compensation and policy ocp is responsible for the following functions § establishing and maintaining the policies and procedures of the compensation management system § recommending to the director of dhrm solutions to compensation and policy issues § providing consultation and technical assistance to agencies regarding compensation management and general policy matters § conducting legislative studies § obtaining salary reference data and providing agency management with access to this information § monitoring and evaluating agencies usage of pay practices and effectiveness of the entire compensation system 2

[close]

p. 15

§ reviewing and responding to agency appeals § establishing and changing the pay band assignments of roles rebanding § establishing new career groups and roles § establishing or changing pay differentials § reviewing agency salary administration plans see appendix a agency salary administration plan guidelines and agency implementation readiness checklist § conducting program evaluation reviews § approving exceptions to state policy § approving innovative compensation programs § establishing categories of pay supplements to base pay · agency heads the virginia personnel act specifies that the heads of all state agencies shall be the appointing authorities of their respective agencies and shall establish methods of personnel administration within their agencies agency heads or their designees are responsible for all personnel and compensation actions affecting their agencies and may assign specific compensation responsibilities to employees in leadership roles all executive branch agencies have the authority to take the following actions that affect the compensation of employees § developing implementing and evaluating the appropriateness and effectiveness of the agency salary administration plan and modifying when necessary § determining and documenting salaries in conjunction with the agency salary administration plan § hiring see appendix c employment statuses § approving dual incumbency of positions § establishing and abolishing positions § assigning duties to employees § transferring positions to and from locations § administering the compensation management system pay practices § conducting salary surveys and analyzing data in accordance with dhrm guidelines § documenting and requesting differentials rebanding or career group revisions § approving salary supplements 3

[close]