An Introduction to Staff Compensation Strategy in Higher Education

Heightened employee expectations and pay transparency pressures have cast a spotlight on compensation for higher ed staff. And unfortunately, colleges and universities can no longer rely on superior non-monetary benefits to make up for weak salaries.

The talent crisis following COVID-19 spurred a wave of compensation investments that helped “stop the bleed” at most institutions, but these one-time investments are not enough to prevent future talent loss. While most colleges and universities will never be able to compete on salary alone, campus leaders must turn their attention to developing a long-term strategy to strengthen the market credibility of their staff compensation so they do not immediately lose top talent due to pay.

Given growing budgetary pressures and financial challenges at colleges and universities, this is no easy task. Cabinets, divisional and department heads, and managers must make tough decisions about where and how to invest limited resources.

EAB designed this briefing to get campus leaders who are not HR experts up to speed on out-of-sector compensation principles and spark honest dialogue about staff compensation strategy in higher ed. Download the full brief or explore the highlights below.

The brief is not intended to be comprehensive, nor is it designed to help HR teams implement practices. For further implementation support, please see EAB’s Market-Credible Staff Compensation Toolkit.

How to boost competitiveness using out-of-sector compensation principles

Most colleges and universities have narrowly focused on offering attractive non-monetary benefits in an attempt to appeal to today’s workers. But other industries have simultaneously doubled down on improving their compensation strategy since pay is such a critical factor in attracting and retaining top talent.

EAB has outlined six foundational compensation principles and practices that are table stakes out of sector but often overlooked, underappreciated, or misunderstood among college and university leaders, especially those who lack prior HR experience or expertise:

1. Develop a distinct but well-aligned pay philosophy, compensation strategy, and underlying salary structure and management process
2. Embrace a total rewards approach that strikes a 70/30 balance between direct (e.g., salary) and indirect (e.g., benefits, PTO) compensation
3. Deploy a targeted rather than one-size-fits-all pay strategy that is updated every two to three years based on market data and talent needs
4. Use a combination of base and variable pay tactics to manage personnel costs and drive stronger employee engagement and performance
5. Vary staff compensation based on role, level, and experience or performance while simultaneously guarding against inequities (e.g., based on race or gender)
6. Invest in continuous, transparent communications that get at the “why” and “how” behind your institution’s compensation strategy

While colleges and universities face some distinct challenges and constraints in replicating these compensation practices, campus leaders can no longer afford to ignore them. Instead, they must understand how their institution’s current approach stacks up against their new competitors and where they must realign their practices with modern compensation standards.

Becoming an employer of choice in partnership with EAB: Services and next steps

Equipped with a clear understanding of foundational compensation principles and practices from out of sector, cabinet leadership teams must now partner with CHROs to develop and execute on a long-term compensation strategy for their institution.

EAB has identified four key imperatives for campus leaders seeking to boost the market-credibility of staff compensation and make the most of limited salary dollars.

• Identify their new competitive set(s) for staff talent so they can benchmark themselves against appropriate competitors
• Improve staff salary studies to ensure an accurate understanding of current market position and maximize the ROI of consultants
• Set different pay targets based on their current market position and competition levels for different roles
• Target where to invest limited salary dollars based on their pay targets and institutional talent priorities

To help partners expedite progress and ease implementation, EAB created a corresponding playbook with a quick start guide and tool for each imperative. Colleges and universities must also identify and strengthen the key elements of their distinct value proposition beyond just compensation.

EAB’s An Introduction to Employee Value Proposition and Crafting a Compelling Employee Value Proposition Workshop provide leaders with the insights, step-by-step process, and strategic support needed to develop and advance their campus-wide talent strategy.

Download the Full Brief