How to target higher ed salary investments to bolster recruitment and retention

In response to widespread turnover and heightened competition in higher ed staff recruitment and retention, many colleges and universities have rightly implemented across-the-board salary increases to bring all staff salaries closer to a competitive market rate. But as institutions face growing budget constraints, campus leaders will increasingly have to make tough decisions about how and where they invest limited salary dollars. Now, more than ever, they must find a balance between boosting salaries for all staff and funneling more resources into priority functional areas and roles.

Through our interviews with HR and cabinet leadership teams―as well as an analysis of out-of-sector best practices―we identified four main categories of salary investments that higher ed leaders can use to address different talent challenges. Read on to learn about each approach and the tradeoffs campus leaders must weigh when prioritizing where to invest.

Four ways to decide how to target salary adjustments, ordered from least to most targeted

Approach 1: Implement across-the-board salary increases for all staff

By raising all staff members’ salaries through a flat-rate increase, institutions can strengthen their baseline competitiveness across all roles and functional areas. These across-the-board increases are straightforward to implement since they do not require any prerequisite analyses or tough decisions about which roles to prioritize.

However, across-the-board salary adjustments often do not fully address specific talent problems (e.g., market inequities, difficulty recruiting for certain roles) or incentivize more strategic staffing decisions. They also tend to be quite small, and therefore may be less meaningful to staff. Additionally, across-the-board increases can exacerbate pay inequities since they uniformly increase pay for all staff rather than remedying disparities between staff.

Approach 2: Increase salaries for roles that have outsized strategic and/or operational value

Given that institutions have limited dollars to invest in salary increases, campus leaders can prioritize making targeted adjustments in roles that are critical for achieving goals in their strategic plans or supporting campus operations. For example, institutions might raise salaries for minimum wage jobs because this aligns with their equity and inclusion goals. Alternatively, they might prioritize adjustments for essential roles in areas like facilities that are necessary to maintain campus safety or services.

This approach helps leaders ensure they are investing in high-ROI areas and that their workforce has the skills and capacity required for daily operations and long-term strategic ambitions. But these targeted increases can create pay compression issues since adjustments are not based on tenure or skill. They also concentrate resources in a handful of functional areas or roles, some of which may already be compensated at market rate.

Approach 3: Prioritize salary increases for roles facing heightened talent competition

Another option for higher ed leaders is targeting salary investments in areas where staff recruitment and retention are difficult. This can help strengthen candidate pools and reduce long-term costs associated with failed recruitment and retention. Plus, it can ease the pressure on HR and hiring managers to constantly fill vacant roles, freeing them up to focus their efforts on other strategic activities.

Like other targeted salary adjustments, though, increasing staff salaries based on competition level can worsen pay compression. These adjustments may also not address the underlying causes of high turnover or long vacancies. Moreover, institutions may end up overpaying staff in these positions once the labor market and competition levels normalize.

Approach 4: Make targeted salary adjustments based on how competitive pay is relative to the market

Lastly, campus leaders can use market data to determine where to prioritize salary adjustments. For example, institutions could increase salaries for staff who are currently paid below a certain target (e.g., 80% of the market median) or the minimum of their role’s pay range (which is typically 25% of the market median).

By using a data-informed approach, campus leaders can garner stakeholder buy-in and align salary investments with their goals for market competitiveness. These targeted adjustments can also better support equity goals, since they ensure fair pay for people in the same role and often benefit staff who are the furthest away from the market median.

That said, this approach requires institutions to regularly conduct salary studies so they have accurate market data. Campus leaders may also experience greater difficulty administering and explaining these adjustments to stakeholders who are unfamiliar with how pay ranges and market rates are determined.