askHRPay Structures and Salary Grades
Here at Northwestern University, we recognize that your compensation is an important aspect of your relationship with the University. It is one of the reasons why you come to work every day – and one way you are rewarded for your work effort and contribution.
How is pay determined at Northwestern?
There are three key factors that contribute to establishing pay at Northwestern:
- Classification: Whether the role being performed is considered to be exempt or non-exempt
- External or Market Data: How jobs are valued in the external marketplace
- Salary Grades: How jobs are organized into a structure
Together, these factors ensure staff members are paid in a manner that is internally equitable and externally competitive, based on the type of work performed.
1. Classification: Is the role exempt or non-exempt?
Exempt positions are excluded from overtime and must be paid a salary rather than an hourly wage. Employees may be considered exempt if they meet a minimum salary threshold and if they also meet certain requirements with respect to primary duties.
Non-exempt positions are entitled to overtime pay; however, there are exemptions from this law for executive, administrative, professional, and computer employees. The law requires that non-exempt employees be paid for overtime at a rate of 1 ½ times their regular rate of pay, for all hour worked in excess of 40 per week.
2. External or market data: How jobs are valued in the external marketplace
Pay rates are determined by examining market data – compensation information from other organizations – to compare how other organizations value jobs that are similar to Northwestern jobs, and by examining internal alignment of similar roles within the University itself.
Market data helps us understand external competitiveness with regards to pay. Comparing and aligning compensation at Northwestern with pay at other organizations will help us retain the talented staff we have – and attract those we need.
It also facilitates internal consistency. Market data is matched to job content – providing the basis for consistency regardless of a job’s official title or the School or Central Unit in which a job resides.
We review market data to ensure that pay rates at Northwestern remain competitive. It is particularly important that we stay current with the market, because market data is a foundational pillar of the third factor in determining pay – salary grades.
3. Salary grades: How jobs are organized into a structure
To provide structure to our pay program, positions fit into salary grades. Salary grades group jobs that are paid similarly in the market and deliver similar value to Northwestern. They take into consideration the market data for each job, as well as:
- The knowledge a job requires
- The complexity of the work attached to a job
- The level of accountability associated with a job; and
- Other unique factors of the job at Northwestern.
While jobs within a grade may be different in many ways, they are similar in the way they align and are valued internally within Northwestern.
Each grade has a salary range
Every job within a salary grade is paid within a specified salary range assigned to that grade. The salary ranges are broad – reflective of a significant difference between a grade’s minimum and maximum pay rates. This means, you can receive salary increase in the same job – or even move to a different job – yet still remain in the same salary grade. As you progress in your career at the University, you may move from one grade into another, or you may progress through several different jobs – and receive pay increases – within the same grade. Job changes might be lateral or across functions, depending on business needs, your performance, and your career interests.
Determining the specific point in the salary range at which a staff member is to be paid is dependent on a number of factors, including but not limited to the value of the job in the labor market, the knowledge, skills, and abilities of the staff member, job performance, and the School or Central Unit’s budget. Pay rates should fall within the established salary ranges; at no time should a staff member’s pay rate be less than the minimum of the salary range.
We review our salary ranges periodically, adjusting them as necessary to remain competitive.
What salary grades do for us
- Put structure to how we pay. A salary structure not only makes compensation at Northwestern easier to understand, but is also provides managers with a basis for making pay decisions. Our structured pay program facilitates consistency, fairness, and equity, but at the same time, allows managers the flexibility they need to manage pay.
- Clarify job movement between Schools, Central Units, and between departments. Within each grade, jobs from any number of different functions are grouped together, giving you the opportunity to consider jobs that build new skills or expose you to different areas of the University.
- Make compensation easy to understand. A simple salary structure reduces the mystery of how we pay – for both staff members and managers. It also opens the lines of communication, facilitating conversations about