Stanford’s Pay for Performance Philosophy

Is Foundation of FY09 Staff Salary Program

BY DIANE PECK
Executive Director, Human Resources

July, 2008

In his March 21 memorandum to Stanford’s Deans, Vice Presidents and Vice Provosts, Randy Livingston, Vice President for Business Affairs and Chief Financial Officer, announced the staff salary program which will become effective on September 1, 2008.  In addition to communicating the key elements of this year’s program, Randy took the opportunity to reiterate Stanford’s pay-for-performance philosophy – the underpinning of each year’s salary program.  He said, “Stanford’s annual salary program is guided by our compensation philosophy.  In each job category, we aim to provide salaries/wages equal to the competitive marketplace average for similar positions.”

As adherents of “pay for performance,” Stanford managers base their recommendations for pay increases on each employee’s individual contributions to the work group more than on any other factor.  As Randy goes on to say, “Since we use individual performance to determine salary increases, we would expect there to be a distribution of salary increase percentages across the employee population.  Such a distribution helps
ensure your top performers are being rewarded in proportion to their contributions.  It also communicates the need for improvement among employees performing at lower levels.”

When decision-makers are assessing each individual’s contributions, they must, of course, stay within the confines of available funding.  The primary source of funding for staff salaries is unrestricted General Funds.  Although FY09 is a tight budget year, providing competitive staff compensation is an important priority, so authorized budget levels have been set to allow
Stanford to retain its ability to compete in the marketplace for the most talented staff.

To ensure that we are offering competitive pay, Stanford conducts market research each year evaluating how the marketplace has changed.  This research is coordinated by Human Resources under the direction of Linda Lee, Director of Compensation.  In preparation for the FY09 staff salary program, Linda’s staff analyzed market data on 223 Stanford jobs representing 91% of the University’s staff population.  Market data was gathered from 11 surveys published by professional survey organizations specializing in comparable labor markets.  Some of these surveys are designed primarily to tell us what Bay Area employers pay for various types of work.  Others look at high-tech employers only.  Still others focus on public sector employees or report exclusively on universities and research institutions.  In addition to providing us with information on Stanford pay levels compared to those of our competitors, the surveys tell us what changes, if any, other employers are planning for the structure of their salary programs.

Based on this year’s findings, Stanford will adjust all staff pay ranges upward effective September 1, 2008.  Updating salary ranges offers employees whose performance meets or exceeds expectations a greater opportunity to increase their pay over time.  Stanford employees can view the updated salary ranges on the Compensation Department website at https://compensation.stanford.edu/guides.html beginning September 1.

Competitive pay alone is not why Stanford is able to attract and retain the best employees.  Our benefits package must also be competitive.  And it is.  We continually update and restructure benefits programs in response to the expressed needs of our employees and to match what is offered by our competitors.  In addition to generous benefits under traditional programs, Stanford offers some unique programs, examples of which include the Tuition Grant Program, programs offered through the Work Life Office and programs that are part of the new Be Well initiative. 

No description of the benefits of working at Stanford would be complete without mention of intangibles such as the desirability of the campus’ location, the intellectual and cultural diversity of our environment and the University’s stellar reputation as a pre-eminent teaching, learning and research institution.  Over 50,000 applicants a year seek to join the existing staff who are involved in matters of importance in a broad spectrum of endeavors within the scientific realm, in humanities areas and in the professional schools.

Taken together, these elements constitute a “total compensation” package designed to produce a level of job satisfaction that allows us to attract, reward and retain valued staff employees and to create an environment where people feel valued and can do their best work.

If you have questions regarding the staff salary program or other Stanford compensation policies and programs, you can find additional information at http://compensation.stanford.edu.  You can also talk with your supervisor or your human resources manager.