Saturday, April 7, 2012

Pay Grades and Tenure Stress

I am going to explain how pay grades work in my world, and then I'll strive to explain why the Union methodology seems so irrational.  And it may explain why Teachers are so nervous about losing tenure.

In my world, there are something called pay grades.  Let's assume the following:
  • Grd 5 pays $30K to $50K w/ a midpoint of $40K
  • Grd 6 pays $40K to $60K w/ a midpoint of $50K
  • Grd 7 pays $50K to $70K w/ a midpoint of $60K
  • Grd 8 pays $60K to $80K w/ a midpoint of $70K
  • Grd 9 pays $70K to $90K w/ a midpoint of $80K
And then each position in a company is assigned to a grade. This is done based on the position's education requirements, market wage research, other internal positions, responsibility level, etc. The goal is to ensure that employees are compensated commensurate to their value.  If the company pays too much, they waste the Owner's/Shareholder's money.  If they pay too little, they suffer high turnover and incur excessive recruitment, training and other costs which wastes the Owner's/Shareholder's money.

Usually a new college grad would start at say $30K in an entry level position (ie grd 5), and then they would get raises as their experience level increased.  The goal being to get them to the midpoint within a few years, the rate of increases being somewhat dependent on their capability.  This is because midpoint  is approximately market rate for an experienced person in that position, and the goal is to make sure the employee is fairly compensated. (And if the employee is exceeding expectations, there is room in the grade to pay them above market) {compa ratio}

When the employee's experience and capability have increased to a point where they are consistently more effective or can handle more responsibility, they are then promoted into a position at a higher grade.  In this case our $38K grd 5 employee, may become a $41K grd 6 employee.  Then they grow into that position.

It is important to remember that each grade comes with additional responsibilities and/or expectations. So at grd 5 the employee may be a Purchasing Analyst, then a Buyer at grd 6 and a Sr Buyer at grd 7.  At each of these levels the employee's responsibility level increases, therefore the company can justify paying them more. Also, the employee often is able to leverage their knowledge and capabilities by delegating or leading others. (ie more/better output = higher compensation)  Often the grd 7 or grd 8 positions may be Team Leader or Supervisory positions, and grd 8 or grd 9 may be Supervisory or Mgr positions.

One more note, I have seen people moved up in grades and I have seen people moved down.  At first I thought it was unfair to demote an employee, then after some thought I began to understand that it is the best thing to do.  If the employee gets promoted above their capability, it is better to allow them to retreat to where they are capable than to escalate the problem until they quit or are fired.  The goal again is to match employee capability to the right position/grade and ensure they are paid fairly for the work they are doing.

So how does this relate to Teacher tenure and all the stress surrounding the topic?  The current Teacher compensation systems that I have seen are all based on years of experience and level of education.  And the difference between the entry level Teacher and the Teacher with many years and degrees is huge. (~2 times)  The problem is that these 2 Teachers may have classrooms right next to each other. (ie similar kids and qty)  The big challenge then is how does the $70K Teacher show that they are twice as valuable as the $35K Teacher right next door.

In my world, there would have to be a significant benefit to justify the pay difference.(ie pay for work, not pay for resume)  Some things that come to mind that could justify the experienced Teacher's higher compensation would be more kids in their class, higher rates of learning in their class, more troubled kids in their class, coaching of less experienced Teachers, Team Lead or Supervisory oversight, etc.

Since I am reminded that I don't know much about Unions, Schools or how either work, are there increased levels of responsibility or higher expectations for the highly compensated?  If so, what types of things justify the large difference?

14 comments:

John said...

Oh I forgot this interesting link. Apparently the bill is headed for Dayton's desk soon, it will be interesting to see what he does with it. Star Tribune: Teacher Tenure

Anonymous said...

The one thing you forgot to mention is that the salary increases which propel someone into the higher pay grades are based entirely on merit. That is, you do the higher-level work and THEN move up in pay. If you don't work above your pay grade, you don't get a raise, and eventually inflation will "convince" you that you should be doing something else that pays better. Unions give everybody the same raise, every time. That's dumb.

BTW, you have already announced that Dayton has already announced he will veto the bill.

J. Ewing

John said...

I thought I mentioned that at least twice. And being the eternal optimist, I keep hoping he wil see the light and reverse his position.

John said...

A real life example to prime the pump. There are 3 grades of Proj Mgrs where I work. The highest is expected to close ~ 70% more projects per year. They do this by running more at one time and/or by running them more effectively/quicker.

Anonymous said...

My company even had a "dual ladder" so that engineers and other skilled professionals could advance as far up the pay scale as managers. This avoided the common situation where we would lose our best engineers to gain a poor manager. The skillset isn't the same. In the schools, most teachers move into administration because the money is better, and we end up with more administrators than we need. If we had "senior teachers" or whatever you choose to call them, responsible for mentoring younger teachers while teaching more kids, more effectively, in every class, we would or should pay them as much as the administrator that we didn't need in the first place. Thanks to the union, we don't get that chance.

J. Ewing

John said...

We have that also, officially there are 3 paths. Technical, Project Mgmt and Supervisory. However, the first 2 are not used too much at the higher levels. You would have to be working on something that has high value add. (Vs being responsible for 20 people like you)

Rule of thumb: Supervisor should be 1 grade above highest employee. Unless Supervisor of rare experts, then likely paid less.

R-Five said...

It's even more complicated in some cases. What is employee's value to competitor, like a financial planner or hair stylist that will take loyal customers with them? Another factor is replacement cost, how much to retrain? Where can you enroll to learn how to repair vending machines?

But as to teachers, it's mostly about productivity or it should be. Trouble is, the current system is assembly line, all students being matriculated through the system at the same pace. The superman that can install wheels like a NASCAR tire changer is no more productive than a nominal hire unless he can work on a faster line.

John said...

Speed,
I guess I would disagree... Or it is a pretty flexible assembly line. At least in math and reading.

In the RAS schools that I have spent the last 12+ yrs in as a parent. They have a variety of programs for those students that are behind and for those that are ahead in capability.

However I do agree that like a chain or an assembly line, the quality unfortunately is only as good as the weakest link or station. If you have a poor performing station, the whole line pays for it through poor output, poor quality, rework, delays, etc.

All,
Sorry to those that are insulted when I compare students to widgets. I know you disagree, but the reality is that the sweet innocent children enter the system at various levels of knowledge and capability. The system then does what we call "value add" in the manufacturing field.

Since there is significant variability within the incoming resources, the system needs to be robust enough to handle this if we want the outputs to attain a minimum quality. (and preferably maximize the quality of each raw material's upon output/graduation)

We may not want to change a sow's ear into a silk purse, but we do want to change that sow's ear into a nice useable purse through value add.

Anonymous said...

I agree with you, but let me give you another example. You know that when buying raw material, you can cut costs by accepting a wider tolerance. Steel sheet with a tolerance of +/- .002 costs a lot more than that with a +/- .02, for example. If I design my product and processes to use the wider tolerance material I can reduce costs and price or, since we're talking about education where end product quality is the goal, produce higher quality for the same cost. Since you've repeatedly said "we" don't control raw material quality in kids, then "we" have no choice but to adapt our processes. The only question is what "we" are waiting for, and why hasn't the competition driven us out of "business"?

J. Ewing

John said...

I agree that one can reduce raw material costs by loosening tolerances, and that the Parents of the unlucky kids have certainly taken advantage of that. I mean they are saving time, effort, money, etc. Unfortunately that means the next stage in the process has to make up for it.

And typically a process that is robust enough to handle wide variation in the negative direction is more expensive than one who's inputs are very consistently positive.

Using your example, if the allowed flatness is +/- .02 it would be likely that the company would need to use a roller flattener to bring it to +/- .002 before they could even start using it to build their final product.

That is why I am always fascinated that Private Schools who have the best incoming material can charge so much. And that the Public schools who have HUGE variation are labelled as too expensive.

R-Five said...

The teacher assembly line is grades 1 to 12. Maybe you can go a little faster a year or two or a subject or two. But every fall is a level set. And at the end your star student gets a diploma that isn't much more valuable than the one the slacker gets.

Anonymous said...

Which is why those schools that use individualized (computer-aided) instruction succeed so well. Public schools refuse to compete for that huge market and will eventually be forced out of business.

J. Ewing

John said...

Again, not really...

By Middle School, the advanced kids are moved into the pre-AP classes. And I think they are working their way towards having 3 math levels for each grade. Then of course High School is somewhat ala carte. My daughter often has older students in her higher level classes.

The degrees may be the same, however since I spent 3 days during Spring break touring colleges, I can assure you the "Output" is perceived as different. Take a look at all these Admissions Criteria... Not so easy to get into the U of MN as it once was...

Anonymous said...

Part of the problem could be remedied by simply increasing the rigor and expectation level for all students. Of course, you would have to adjust the teaching methodology and offer teacher support systems to get the most out of it, all things that the unions' hidebound rule set won't allow. They're like autoworkers where the speed of the line is set in the contract and isn't allowed to increase.

J. Ewing