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What Is a Salary Schedule?

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Salary schedules enable workers to understand how their incomes will increase over time. Often used to set pay levels for government workers, particularly public school teachers, salary schedules outline the incomes of employees at different stages in their careers. While salary schedules offer many benefits, some critics advocate for pay scale systems that are more merit-based.

What Is a Salary Schedule?

A salary schedule, also called a salary matrix, is an outline of pay levels that an employee can achieve. Employers offer these salary matrices in table format. The top row of a schedule of salaries shows headings that represent variations in types of employees, with descending columns that show salary levels. For example, a salary matrix may label employees with bachelor’s degrees as “Class A” and workers with master’s degrees as “Class B."

The rows that descend below the headings indicate steps. Each row has an increasing value, which indicates the amount of pay a worker will receive by advancing through the steps. Typically, the first column represents the lowest paid worker group, while the column on the far right represents the highest paid employee group. For instance, the first column may represent new teachers who have bachelor’s degrees, while the last column represents teachers with master’s degrees and 30 years of teaching experience.

The number of steps in a salary schedule varies. Entry-level employees may have six steps of increases, while workers at the next level might have eight steps. For example, Class A employees may make $60,000 at step 1, $62,000 at step 3 and $66,000 at step 6. Their Class B workers may start at a salary of $65,000 on step 1, and make $68,000 when they reach step 8.

Each step also represents a level of advancement, often expressed as an increment of time. For example, step 1 may correspond with a worker’s first year on the job, while step 6 represents year six.

The last step on a salary matrix represents the maximum pay rate an employee can achieve. However, workers can often continue to receive pay increases by advancing to another column on the matrix. For instance, if a teacher with a bachelor’s degree were to max out at level 6, he could move to the Class B salary column by earning a master’s degree. His salary would increase to the Class B, step 6 income level and he would continue to work as a higher-paid Class B employee.

Steps can also indicate levels of proficiency. As the employee develops in her job, she can advance through subsequent steps. Effective salary schedules typically have just a few steps to complete. For instance, most teachers can reach a professional level of effectiveness in the classroom within five to 10 years, so their entry-level salary schedule should include five to 10 steps of pay increases. Fewer steps also give entry-level workers an incentive to continue their professional development, in order to advance on the salary matrix.

The number of columns in a salary schedule can also provide incentives for improvement. Some salary matrix systems have many columns, which enables employees to increase their pay more quickly. For example, a salary matrix with a dozen columns may allow an employee with a bachelor’s degree to advance from Class A to Class B after earning just six credits toward her master’s degree.

Many factors affect salary schedules, including politics and economics. For example, if a new administration cuts an education budget, a school district may increase teacher pay scale steps in order to slow pay increases.

How Does Teacher Salary Increase Over Time?

Teacher salary schedules vary from district to district. However, most salary matrix systems offer teachers pay increases based on length of serve and education. For example, in The School District of Philadelphia (Pennsylvania), a special education teacher with a bachelor’s degree can make $47,118 on step one – the beginning of his career – and max out at $69,060 when he reaches step 11.

In some salary schedule systems, a teacher can earn a higher salary by attaining a master’s or doctoral degree. For example, in California’s Gustine Unified School District, a teacher with a bachelor’s degree can earn a step 1 salary of $61,738, while a teacher with a master’s degree can take home a step 1 income of $65,956.

Some salary matrix systems also offer longevity pay for teachers after they reach certain milestones. For instance, a Gustine teacher with a bachelor’s degree will max out after reaching step 6, which pays $67,877. However, after teaching for 15 years, she can earn $71,003 per year and gain two more salary steps. After completing the next two steps, she will earn $76,363. After working another 15 years, she can increase her salary again, and gain two more steps that offer the opportunity to increase her salary to more than $85,000.

Some salary schedule systems also offer higher salaries for teachers who earn certification. For example, North Carolina teachers certified by the National Board for Professional Teaching Standards make more money, and follow a different salary schedule, than their non-certified coworkers do.

Does Every Company Have a Salary Matrix?

Salary schedules are most common in government positions, particularly teaching jobs. In fact, public schools have used salary matrices since the 1920s. Since 1950, 97 percent of public schools have adopted the salary schedule system, according to The Brookings Institution.

While some companies use salary matrices, most do not. Many companies use bonus performance matrices that define the amount, if any, of pay increase an employee can earn. Salary schedules outline pay increases based on completing a step, which may simply involve continuing in a job from year to year. Performance matrices, however, show how workers can earn more money by excelling in their jobs.

Typically, bonus performance matrices rely on a rating system to determine merit pay increases. For example, a New York University employee can earn a 4- to 6-percent pay increase, if her work performance substantially exceeds her supervisor’s expectations. If her performance meets average expectations, she can expect a 1- to 2-percent raise, and if she performs below expectations, her pay will remain the same.

Many companies link merit increases to employee performance reviews. In order for a bonus performance matrix to work effectively, employees must understand their employers’ expectations and the matrix rating system must clearly match the rating system used in a performance review. For instance, if a performance bonus matrix states that an employee will receive a 2 percent raise if he “meets expectations” his performance review must also state that he “meets expectations” in his job.

Before a company can create an effective performance review and performance bonus matrix, it must determine the value of each position and the expectations of workers in their positions. For instance, if a company needs to hire an information systems specialist, a human resources officer and information systems manager must decide the value of the position to the company and the starting pay rate of the person they will hire.

To assess the starting pay rate, the human resources officer and information systems manager typically research the market to determine common salaries for the position. Oftentimes, companies set minimum and maximum pay rates for a position, based on the position’s value to the company.

An organization also may establish different incentives for each position. For example, the company may offer to send the information technology specialist to two conferences each year. Like pay increases, companies can link incentives to performance. If the employee performs well, she can go to the conferences, but if she fails to meet expectations, the company will not send her to the events.

When setting performance standards for individual positions, a company must understand how their incentives and bonus performance matrix stacks up against other companies in the market. Workers often know what pay rates and incentives various companies offer for particular positions. If a job candidate receives more than one job offer, he likely will choose the company that offers the best salary and perks.

What Are the Benefits of a Salary Schedule?

Assessing the pros and cons of salary schedules often depends on whom you ask. Some workers like salary matrices, because they can settle into their positions and know how much they will make throughout their careers. Administrators and administrative bodies, such as school boards, benefit from salary schedules, because the tool allows them to more easily determine the salary expenditures in long-term budgets.

Employees who have felt overlooked for pay increases in other jobs often benefit from the standards a salary matrix establishes. Salary schedules for teaching positions typically define pay increases based on just two factors, length of service and education. A teacher knows she can expect regular pay increases with every step she completes, and can gain even more income by seeking advanced degrees.

Critics of teacher salary schedules usually object to two aspects of the system. First, salary matrices reward under-performing teachers by providing regular pay increases simply by staying in their jobs or attaining more education.

Second, the salary schedule system does not reward teachers who perform exceptionally well in their jobs. For example, half of a teaching staff might take steps to improve their students’ standardized test score, while the other half exert no effort with their students. If the school’s test scores increase dramatically, the teachers who did not contribute to the improvement will still receive pay increases, because of their salary schedule. Meanwhile, the teachers who exerted effort to improve test scores will receive their scheduled pay increases, without any additional reward.

Citing inequities in the salary matrix system, some states have experimented with implementing performance-based pay increases. In some cases, performance incentives have been applied along with salary schedules, while in others performance-based increases have replaced salary matrices altogether.

Critics of performance-based teacher pay increases cite the lack of good tools to measure a teacher’s effectiveness. On the other hand, advocates of performance-based salaries seek more accountability of teachers. However, many factors affect a teacher’s effectiveness in the classroom. For instance, a teacher in a wealthy school district might appear exceptionally effective, because her students make good grades and perform well on standardized tests. Meanwhile, a teacher who teaches children from low-income households might perform just as diligently in the classroom as his colleague in the wealthy school district, but his students have poor grades. In many cases, factors such as hunger and household instability negatively affect student performance, even when their teachers provide exceptional care and instruction.

Another criticism of the salary matrix system cites lack of evidence in the relationship between a teacher’s effectiveness in the classroom and the education she has attained. In fact, a study of North Carolina schools showed that earning an advanced degree did not necessary increase a teacher’s effectiveness in the classroom. However, some teachers were more effective in their classrooms when they pursued advanced degrees in the primary topics they taught. For example, a science teacher might perform better in the classroom, if he earned an advanced degree in biology or chemistry, which supports the benefits of a salary schedule system.

The most effective salary matrix systems provide larger increases during the early years of a teacher’s career. Since many teachers burn out and leave teaching to pursue other careers, larger pay increases at the beginning of their teaching careers provides an incentive to remain in the teaching profession.

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About the Author

Michael Evans’ career path has taken many planned and unexpected twists and turns, from TV sports producer to internet project manager to cargo ship deckhand. He has worked in numerous industries, including higher education, government, transportation, finance, manufacturing, journalism and travel. Along the way, he has developed job descriptions, interviewed job applicants and gained insight into the types of education, work experience and personal characteristics employers seek in job candidates. Michael graduated from The University of Memphis, where he studied photography and film production. He began writing professionally while working for an online finance company in San Francisco, California. His writings have appeared in print and online publications, including Fox Business, Yahoo! Finance, Motley Fool and Bankrate.