Establishing Pay Rates

Duke University Health System has established guidelines for assisting managers in determining appropriate pay rates for different situations, including:

New Hires

The new hire starting rate of pay is determined by the hiring manager. Factors to consider in determining this rate include:

  • market band placement guidelines
  • applicable knowledge, skills, and abilities
  • relevant experience
  • general market conditions
  • other considerations (budget, legal, internal pay relationships)

For some bi-weekly job classifications, there are more detailed guidelines established annually. If you need assistance in establishing pay rates, contact your entity HR Director. There are also specific guidelines for determining merit increases for new hires.

Market Band Placement

Market Band Placement

  • 80 percent of the Market Target - Meets minimum requirements of the position.
  • Below the Market Target - Fully qualified to perform all duties and responsibilities of the position.
  • Above the Market Target - Highly experienced professional who possesses skills, competencies, and capabilities well beyond the minimum required.
  • 120 percent of the Market Target - Long-term experienced professional who possesses well established skill sets and performance capabilities.

Applicable Knowledge, Skills and Abilities

The knowledge, skills, and abilities of the new individual as compared to others in the organization is essential to ensure that the staff member is paid appropriately in comparison others.

Direct Relevant Experience

Prior work experience that has provided applicable knowledge, and therefore value that is directly relevant to the work to be performed, should be counted when determining relevant work experience. Prior work experience is considered “relevant” to the staff member’s current job when the prior duties performed and the knowledge, skills and abilities gained in those prior positions are readily applicable to the job to be performed.

Experience gained in a part-time position should be pro-rated. For example, an Administrative Assistant candidate with 4 years of part-time experience prior to working at Duke as a Secretary should be credited with 2 years (50 percent) of relevant work experience.

As a guideline, two years of relevant and applicable work experience are typically equal to one year of college education. This guideline is provided to assist in translating knowledge equivalency, whether achieved through actual experience or formal education.

Indirect Relevant Experience

Prior work experience that is indirectly relevant to the work performed by the staff member in his or her job should be counted when determining total relevant work experience. Some experience is sufficiently applicable that will give 100 percent credit for the experience (as referenced in the direct experience guideline). In the case of indirect experience a 100 percent credit is not warranted. Instead, a half credit (50 percent) will be applied and added to the direct experience (i.e., a year of LPN experience would count as a half a year of Clinical Nurse experience).

General Market Conditions

The rate of pay is competitive within the market. Pay should be what is required to attract, recognize, and maintain the skill sets and talent needed.

Budget, Legal and Internal Pay Relationships

Manage within budget following the business processes. Follow federal laws such as FLSA, Equal Pay Act, Age Discrimination in Employment Act, etc.

When considering the pay of a new hire either through external recruitment or a promotion, a review of the background of the new individual as compared to others in the organization is essential to ensure they are paid appropriately in comparison to each other.

Merit Increases

Duke is committed to linking the opportunity for annual pay increases to staff performance during the year. The opportunity for an annual merit increase is based on an individual’s annual performance evaluation and annually approved guidelines. The purpose of the annual performance review is to ensure staff receive candid performance information for the year and clear goals and development plans for the coming year. Merit increases are effective in October. The Pay & Performance web site provides information and guidelines for the annual process and instructions for completion of the Performance Evaluation and Planning Form.

Merit Increase Guidelines for New Hires

Duke supervisors are guided by the following protocols in determining pay increases for new hires:

  • New staff hired prior to January 1 are eligible to receive 100 percent of the earned merit increase in October of that year based on the applicable fiscal year guidelines and designated performance.
  • New staff hired during the period from January 1 to March 31 are eligible to receive 50 percent of the earned merit increase based on the applicable fiscal year guidelines and designated performance.
  • New staff hired during the period from April 1 to September 30 are not eligible for a merit increase until the following evaluation period.

Promotion

A promotion is defined as advancement to a job that requires a substantially higher level of competency or substantially different responsibilities (i.e., higher market target within a broad banded structure).

Guidelines for Promotion Pay

Promotional increases may be up to one-half the percentage difference between the market targets of the new and present jobs, whether those jobs are in the same pay band (intra-band promotion) or in different bands. For example, if the difference between the new and present market targets is 15 percent, the promotional increase should be up to 7.5 percent.

  • The new pay rate should be within the range of competitiveness, as defined in the Pay Structure Features, of the new job (i.e., at least within 20 percent to 25 percent of the new market target). If the promotional increase calculation described above is not sufficient to establish a pay rate within the competitiveness range, the manager should determine a rate that does meet this level.

Demotion

A demotion is an assignment to a lower leveled (i.e., lower market target) job that can occur for reasons initiated by the department or staff member (i.e., lower market target, such as, market target 3 to market target 2 of the same or different market bands). It should only be used if the staff member can still make a significant contribution to the organization in a new capacity. Staff members who are demoted should receive a rate within the competitive range of the lower market target commensurate with their proven qualifications. This rate generally represents a pay reduction. The new rate should neither be below the minimum nor above the maximum of the new pay band.

Guidelines for Demotion Pay

Staff should receive a rate as follows:

  • If the value (market target) of the new position is at least 10 percent less than the present position, the action is to be treated as a demotion.
  • The supervisor will evaluate the staff member’s performance at the time of the demotion. If the staff member has not had a performance evaluation within the last six months, the current supervisor will conduct an appraisal at the time of the demotion.
  • The supervisor will determine if any pay adjustments are necessary.
  • If the demoted staff member’s new pay rate is substantially above the competitive range of the new job, his/her rate should be reduced.
  • If the demotion occurs within six months before the evaluation date (October 1) and is a result of performance, the annual evaluation increase date will be delayed to the following year.
  • If the demotion occurs within six months before the evaluation date (October 1) and is for a reason other than performance, a pay increase in that evaluation period will be considered provided the current pay falls within the range of competitiveness.
  • The staff member’s new supervisor will discuss the new performance standards on which the staff member will be evaluated in the next performance period. This must be completed within the first two weeks in which the staff member assumes the new job.

Transfers

A lateral transfer occurs when a staff member assumes a job that has a market target that is within 10 percent of the staff member’s current rate of pay. A lateral transfer generally does not change the staff member’s pay rate, as there is no increase in market target or responsibility.

A lateral transfer occurs when a staff member assumes a job that has a midpoint comparable to the staff member’s present job. A lateral transfer generally does not change the staff member’s pay rate, as there is no increase in market target or responsibility.

A transfer from one classification to another in a lower market target at a staff member’s request will generally result in a pay decrease.

If a hire is an internal hire from the university, a promotion, transfer, or demotion will be defined as follows:

Action Determination
Promotion The new market target is at least 10% higher than the midpoint of the staff member's current job (if transferring from Campus or Medical Center), OR at least 10% higher than the staff member's current rate of pay (if transferring from the IT Band).
Lateral Transfer The new market target is within 10% of the midpoint of the staff member's current job (if transferring from Campus or Medical Center), OR within 10% of the staff member's current rate of pay (if transferring from the IT Band).
Demotion The new market target is at least 10% less than midpoint of the staff member's current job (if transferring from Campus or Medical Center), OR at least 10% less than the staff member's current rate of pay (if transferring from the IT Band).