Kansas State University

Total Rewards Initiative update

Submitted by Human Capital Services

Earlier this year we communicated K-State's compensation philosophy, which was developed by more than 1,000 employees in the K-State community. A goal of the compensation philosophy is to pay market equitable salaries.

What this means is that K-State will strive to compensate employees at the median of the competitive labor market. Median pay is the point in which half of the employers pay more and half pay less. The market analysis will construct salary structures that outlines data points at the 25th percentile, 50th percentile and 75th percentile.

Throughout the Total Rewards Initiative you will hear terminology that describes the approach for analyzing market analysis and designing total rewards programs. A few of these terms include:

• 25th percentile: This is the minimum of the salary range.
  
  The official definition from CBIZ is "The value in an array that falls at the first quarter of the sampled data — i.e., 75 percent or 3/4 of the values in the sample are greater than the 25th percentile value."

• 50th percentile: This is the median of the market.
  
  The official definition from CBIZ is "The value in an array that falls in the middle or median of the sampled data — i.e., the values in the sample fall above this value and half fall below."

• 75th percentile: This is the maximum for the salary range.
  
  The official definition from CBIZ is "The value in an array that falls at the third quarter of the sampled data — i.e., 25 percent or 1/4 of the values in the sample are greater than the 75th percentile."

Another important term you will hear for the next several years is compa-ratio. This term defines an employee's current salary divided by the market 50th percentile or the midpoint of the salary range. For example:

• An employee whose salary equals the 50th percentile of the market has a compa-ratio of 100 percent.
• A compa-ratio of less than 100 percent indicates that the employee's salary is less than 50th percentile of the market.
• A compa-ratio greater than 100 percent indicates that the employee's salary is greater than the 50th percentile of the market.