Human Resources Case Study

Background – An important focus of labor negotiations at an institution of higher education concerned salary compression. This phenomenon occurs when an institution pays market rates to recruit new employees but implements annual salary increases that lag the market.

Challenges/Objectives – Salary compression was a considerable problem for senior faculty. New faculty members were getting hired at market rates. The full senior professors felt that their salaries were stagnating when compared to the salaries of the new hires. The administration recognized this problem but wanted to reward the senior faculty with a merit-based system.

Strategy/Plan – We compiled 15-20 years of salary history data. We documented exactly how the university salary structure became compressed over time. Our finding showed that the best way to address the compression issue was a multi-solution approach including merit play and adjustments for inflation.

Outcomes – The key result from our longitudinal analysis of pay clarified the issue and generated conversations that informed labor negotiations. The data provided results that all parties could use for reasonable negotiation.