Base Pay

Fixed compensation paid to an employee for performing regular job responsibilities and duties. It is paid in regular intervals- hourly or biweekly. This does not include shift differentials, overtime, incentive or any other pay element other than base pay. It is non-discretionary - it does not vary according to goals or results achieved on a regular interval basis.

Benchmark Job

A job whose major responsibilities and requirements are common in the market. These jobs are typically included in salary surveys and have reliable market data readily available year after year. 

Business Title

A title that provides more description to the official Title by providing detail about the specifics of an individual position within the organization or the type of work performed. Formerly called Working Title prior to TTC.

Compa-Ratio

The ratio of an employee’s actual pay rate to the targeted market rate, typically the midpoint or median of the pay range. Calculated by taking the employee’s rate of pay divided by the targeted rate. A compa-ratio of 100% means an employee is being paid at the targeted level.

Compa-Ratio = Pay Rate ÷ Market Rate (at targeted percentile; usually 50th)

Compa-ratio, while a simple calculation, expresses the performance level, experience, and other qualifications of an employee. The following assumptions describe the relationship between an employee and the employee's compa-ratio:

• 80% ‐ 89.9%: Generally for new hires, those with limited experience, or those employees newer to the role that are learning and demonstrating progress in performing all responsibilities of the job; typically, less than and up to 3 years in current role or job title.
• 90% - 99.9%: Should be the range for competent staff that fully delivers on a day-to-day basis what is expected of them based on regular job duties and responsibilities; typically, at least 3 and up to 7 years in current role or job title.
• 100%+: Reserved for those staff who have been in the same position for the majority of their career and are consistently meeting and/or exceeding expectations or for those high performers preparing for the next move; typically, 7 years and more years in current job or job title.

For positions that only have campus minimum rates, you can create midpoint and maximum values by calculating the maximum as 150% of the minimum, and equating the midpoint as the average of the minimum and maximum values. Example: Minimum = $80,000, Maximum = $80,000 x 150% = $120,000, Midpoint = ($80,000+$120,000) ÷ 2 = $100,000.

Compa-ratio Example

Employee X has an annualized base pay rate of $65,000 as a Senior Accountant. Market data says that the 50th percentile for a Senior Accountant is $70,000. Employee X's compa-ratio would therefore be $65,000 ÷ $70,000 = 92.85% or 0.9285

Compensable Factors

The details about a job that influence how that job is valued and how the employee is ultimately paid. They are job-specific: years of experience, education level, skills, certification requirements, management &/strategic responsibilities, travel percentage, etc. Compensable factors are also market-specific: industry size, organization size, geographic location, etc. Surveys typically give definitions of compensable factors to make it simpler to access more specific data “cuts”, which are different views of data, filtered by specified criteria.

Compensation

The money received by an employee from an employer as salary or wages in exchange for work (not including fringe benefits).

Compensation Philosophy

A statement of what the organization believes how employees should be paid. It should support the business strategy and be a good fit with the organization's culture. 

Compensation Strategy

Description of how the organization will carry out its vision, mission, and business strategy through employee compensation. Compensation strategy guides the design, implementation and administration of a compensation program which includes pay and benefits. 

Compression

The state where there is little difference in salary between employees who have distinct differences in their respective knowledge, skills, experience, abilities, and/or reporting structures or organizational structure stance. 

Demotion

The movement of an employee into a job that is assigned to a lower salary grade then the employee's current job. 

Equity/Pay Equity

The practice of ensuring employees performing similar duties (in similar work environments) are paid fairly without regard for race, color, gender, religion, sex, national origin, age, and/or disability for similar work performed, but taking into account market and job-related factors such as performance, education, work experience, seniority, etc.  

Exempt/Exemption (FLSA)

Describes a job that is not governed by the Fair Labor Standards Act. Anyone working in an exempt position is not eligible for overtime pay (1.5 times the regular rate of pay) for all hours worked over 40 hours in a workweek.

Learn more about FLSA exemption on the Department of Labor site.

Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards. It applies to full-time and part-time workers in the private sector and in Federal, State, and local governments.

Learn more about FLSA on the Department of Labor site.

Hourly Rate

Compensation determined at a fixed rate per hours worked. (An employee's annual pay is not fixed, but dependent on the number of hours worked during the course of the year).

Institution ("Inst") Job

A job that has primary responsibilities that impact the majority or the entirety of the institution and/or UW System or has significantly larger scope than the school/college/division in which it resides, and typically contains “(Inst)” in the job title or mentions “institution” or “enterprise” in a standard job description. These jobs are typically found in centralized work units (ex: Office of Administration, Office of Human Resources, Office of Legal Affairs, General Services, Business Services, etc.), but may be found in school/college/divisions depending on the breadth of responsibility, scope, and impact.

Job Classification

The process of reviewing a job based on an objective analysis of its duties, knowledge, skills, and industry or field then assigning it to an organization's job framework. 

Job Framework

An organization of jobs at UW-Madison into job groups and job sub-groups. 

Job Group & Sub-group

A job group and sub-group is an overall grouping of jobs where work performed is of similar nature. 

Job Levels

Variations in the degree of jobs such as the differences between the entry, intermediate and senior level, based on differences in scope, organization impact, complexity of work, independence and supervision, and/or management responsibilities. 

Job Reclassification

The assignment of a job to a difference salary grade within the salary structure based on a change in market value (external) or change in job duties (internal). 

Job Title

A title assigned to a job that describes the job's roles and responsibilities at the university. Job titles should be descriptive of the work and consistent with general market practices. 

Labor Market

The industry or industries where an employer competes for talent. Labor market can be defined by organizational size, geographic location, etc. A labor market is commonly referred to as a “talent market”, “peer market”, or “peer group”.

Lateral Move

The movement of an employee into a job that is assigned to the same salary grade as the employee's current job. 

Market Position

An organization's stance on employee pay relative to market. The university strives to set all eligible employees' salaries to approximate a market competitive range - defined as +/- 15% of midpoint, which results in a range of 85%-115% compa-ratio or 25%-75% PIR. 

Market Study

The process by which an employer compares the employer’s wage rates against the wages paid by companies with similar jobs. 

Maximum

The rate that represents the highest value of a given pay range.

Median

The value equal to the middle value of a data set arranged in ascending order. If you have an even number of data points, the median is the average of the middle two values. If you have an odd number of data points, the median is the middle data point. Please note that this is not always the same as the average or mean, which is equal to the sum of values divided by the number of values.

Merit Pay

A performance increase where an employee is rewarded for sustained work performance with a permanent salary increase as part of a formalized pay for performance program. 

Midpoint

The rate that represents the middle of a given pay range. The midpoint is the “proficiency” point of the job. Employees are generally hired at a wage below the midpoint, and as they gain more and more proficiency, their wages move closer to the midpoint until they are “seasoned” professionals/employees. Employers expect the salaries of seasoned employees to be higher than the midpoint, up to the range maximum.

Minimum

The rate that represents the lowest value of a given pay range. 

Non-Benchmark Job

A job that is either not common in the market of that is not included in salary surveys. Jobs that have been tailored to meet specific needs of the institute or a department, or to align with the expertise of an individual are examples of non-benchmark jobs. 

Non-Exempt/Non-Exemption (FLSA)

Descriptor that indicates a job is governed by the Fair Labor Standards Act and the job and incumbent are eligible for overtime pay at one and one-half times (1.5 times or 150% of) the regular rate of pay for all hours worked over 40 hours in a workweek.

Learn more about about FLSA eligibility on the Department of Labor site.

Parity/Pay Parity

The practice of ensuring appropriate salary relationships are maintained for employees within the same job title or related job titles as imbalances or issues may arise with new hired and differences in pay practices across work units. 

Pay Bands

The broadest grouping of several pay grades with a spread of 100% or more between the minimum value in the lowest range and the maximum value in the highest range.

Pay Differential

The difference between two employees' salaries. Pay differential = (higher paid employee's salary - lower paid employee's salary) / lower paid employee's salary.

Pay for Performance

A pay approach where an employee may receive an increase to their salary based on job performance. It should be based on measurable, equitable, fair, and reasonable objectives that have been thoroughly explained to the employee in advance and measured with a valid and reliable evaluation tool by a trained manager. 

Pay Grade

An identifier of pay range; multiple jobs may be grouped into the same pay grade. The jobs in a pay grade usually share similar levels of knowledge, skills, abilities, etc. 

Pay Range

The lower and upper limits of compensation for a specific title, typically including a minimum, midpoint, and maximum. 

Peer Group

A group of similar organizations that compete for talent.

Percentile

A point or location on a rank-ordered scale, found by arranging a group of data points in ascending order. Percentile defines the value below which a given percentage of the data fall. For example, the 50^th percentile is the exact middle (median) value - half of the data are above that point and the other half are below. An organization’s target percentile is the exact point in the market where it intends to pay employees who are performing at least satisfactorily and exhibit appropriate competency).

Position Description

A description of a specific job as it relates to an employee (i.e., position), which is based primarily on a standard job description. Position descriptions are used for many purposes including recruitment and performance evaluation. 

Position in Range (“PIR”)

The ratio of an employee’s base pay compared to his/her pay range. A PIR value of 0% means an employee is being paid at the minimum; 50% means the employee is paid at midpoint; 100% means an employee is being paid at the maximum.

Example: Employee X has an annualized base pay or salary of $65,000 as a Senior Accountant. UW Salary Structure² says that the minimum = $48,333 and the maximum = $82,971. Employee X’s PIR would therefore be: (($65,000-$48,333)/ ($82,971-$48,333) =) 48.12% or 0.4812. 

Like compa-ratios, PIRs express more about an employee than his/her standing in a specific pay range.  The following assumptions describe the relationship between an employee’s compensation and PIR:

• 0% - 24.9%: Generally for new hires, those with limited experience, or those employees newer to the role that are learning and demonstrating progress in performing all responsibilities of the job; typically, less than and up to 3 years in current job or job title.
• 25% - 74.9%: Should be the range for competent staff that fully delivers on a day-to-day basis what is expected of them based on regular job duties and responsibilities; typically, at least 3 and up to 7 years in current job or job title.
• 75% - 100%: Reserved for those staff who have been in the same position for the majority of their career and are consistently meeting and/or exceeding expectations or for those high performers preparing for the next move; typically, 7 and more years in current job or job title.

When there are only minimums listed (this happens for example with faculty), you can create midpoint and maximum values by calculating the maximum as 186% of the minimum, and equating the midpoint as the average of the minimum and maximum values.* Ex. Minimum = $80,000. Maximum = ($80,000 x 186%) or $148,800. Midpoint = (($80,000+$148,800)/2) or $114,400.

This diagram shows the relationship between PIR and compa-ratio (CR):

Click image to open full-size in new window.

Progression

Advancement within a salary grade due to performance, changes in responsibilities without a change in title, increased knowledge, skills, abilities, years of experience, certifications/licenses/degrees, and/or other elements that add value to an employee's ability to perform his/her job and ability to impact his/her department/division, and/or institution. 

Promotion

The movement of an employee into a job that is assigned to a higher salary grade than the employee's current job due to the acceptance of a higher set of job responsibilities.

Salary

Fixed, regular payment, typically on a biweekly basis.  

Salary Administration Guidelines

Guidelines that ensure that salaries and pay adjustments are determined by using a consistent approach across the University and are aligned with the compensation program’s design and intent. 

Salary Grade

The building blocks of a salary structure. Each salary grade has a range (minimum and maximum values). Jobs in the same salary grade have similar levels of market value, organizational impact, scope, complexity, independence and supervision, management responsibilities, etc.

Salary Range

The lower and upper limits of compensation of a job, which include minimum, midpoint, and maximum values.

Salary Structure

A hierarchical grouping of jobs and salary ranges within an organization. Salary structures are often expressed as salary grades that reflect the value of a job in the external market and/or the internal value to an organization. 

Salary Survey

A study of data on wages and salaries paid by employers for benchmark jobs. 

• More informative if the employer making the wage determination participates in the survey.
• Even more informative if a specific view of the survey data (select cut) that is most relevant to the employer is available and/or the survey already includes data from the employer’s peer organizations

Standard Job Description

A general set of responsibilities, without regard to any specific employee, that describes work performed, and role and impact to the organization. Standard job descriptions are primarily used for market pricing and salary structure design and maintenance.

Title Change

The assignment of a filled position to a different Standard Job Description and Title based upon an evolution of the duties or responsibilities of a position such that the duties performed are better described by a new title.

Title of Record

An employee’s official job title. It is the title associated with the employee’s standard job description.

Total Cash Compensation (TCC)

The combination of an employee’s fixed/base pay plus any variable pay the employee might receive, including incentive payouts, bonuses, other lump sums, etc. TCC does not include non-monetary compensation such as employer contributions to benefits, reimbursements, stock options, etc.

Variable Pay

Compensation paid to an employee based on various metrics against which the employee or group of employees is measured. Variable pay is discretionary- the award amounts are contingent on performance or results achieved based on whatever criteria the organization chooses. Examples include incentive awards, bonuses, lump sums, etc.