We are thrilled to announce the completion of our 2024 compensation adjustments. Our sincere gratitude goes to each and every one of you, the dedicated professionals who make Texas REALTORS® an exceptional place to work. Your hard work and commitment are the backbone of our success, and we are committed to providing a rewarding compensation and benefits package that reflects the value you bring to our team. Thank you for your continued dedication and for making this a great place to work.
By the end of this week, everyone should have been contacted by their manager or department director regarding compensation adjustments for 2024. For eligible positions, increases have been finalized and will appear on this week's paycheck, including a lump sum payment making salaries effective as of January 3 of this year. The following paycheck will normalize to the regular, adjusted pay rate.
Below is a reprint of "How Compensation Adjustments Work at Texas REALTORS®" which we've published a few times. It provides an overview of the process and answers many questions that come up during this process. Please feel free to reach out and ask questions that may not be covered here.
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For some this will be a reminder. For others, we'd like to help bring clarity to our process for annual salary adjustments. It's our goal to provide as much transparency to the process as possible so that you understand the timing, the policy and considerations that go into the process.
It's important to know that raises do not occur immediately and are not concurrent with the annual review process. Our annual performance review process is an essential opportunity for open dialogue about our individual and collective goals, highlighting our strengths and identifying areas where we can improve. This process is focused on enhancing our team's overall performance and effectiveness, rather than being a basis for deciding salary increases at that time. The information below discusses how reviews do affect salary increases and when that happens.
A clear and transparent process. Our compensation system is guided by our Compensation Policy which is available for all employees to access in the Key Resources section of the Bulletin site. This document addresses the timing of and process for annual increases, as well as numerous other aspects of how compensation is determined and adjusted.
The Merit Matrix. As we've discussed previously in all-staff meetings, several factors combine to determine final adjustment amounts. First, every job at Texas REALTORS® is assigned to a particular Salary Grade based on competitive market rates (determined by a third-party compensation consulting firm.) The goal is for everyone to grow within their Salary Grade. Adjustment rates vary by where an individual falls within their grade. Those in the lowest quartile of the grade will see a slightly higher percentage increase than if they were in the highest quartile of the grade.
The second factor impacting compensation adjustment is the performance rating determined during the annual review process. Each employee (who had been employed long enough to be reviewed) was assigned one of three performance ratings; High Performer (3), Opportunities for Development (2), or Needs Improvement (1). Higher performance ratings adjust the percentage increase upward. The performance rating combined with the Salary Grade quartile determines the final base adjustment percentage according to what's called the Merit Matrix which is developed to distribute the total dollars available for raises according to these factors. The percentages in the matrix fluctuate year to year based on total dollars available for raises, performance ratings, where everyone falls in Salary Grades, and extra considerations such as Stars, which we'll mention next. While it is a dynamic tool from year to year, understand that all eligible salary adjustments are determined by the same criteria and percentages within the Matrix for that year.
What are Stars? Started in 2023, Stars are a way to recognize performance during the year that significantly and consistently exceeds that which is expected within our job descriptions and even that of being rated a High Performer. It is a way to reinforce and encourage and elevate the entire organization in certain areas that support key aspects of our Core Values. Two Stars are available for consideration by recommendation from supervisors and discussed at length with executive leadership. Again, Stars are special recognition that are based on demonstrably and consistently going above and beyond high performance. They are not common and not attaining a particular Star does not indicate a lack of performance in any particular area. So what do they mean?
Strong Collaborator: Every job in the association requires and demands collaboration within our teams and other departments. At some point during most projects or tasks, we are required to collaborate, request input or request assistance from someone in another department. Sometimes we can tend to collaborate at the time it is necessary to collaborate or are requested to collaborate by someone else. Think of this as a "pull" to collaborate. Strong Collaborators have a natural proclivity to proactively drive collaboration. They build teams from the onset of a project as a way to improve outcomes and not only allow others to productively contribute to a project (Collaboration core value) but also to have a heads up so they can have ample time to plan ahead to schedule the time it will take to accomplish what's needed of them on a project (Respect core value.) Strong Collaborators, in essence, are pushers of collaboration, rather than collaborating on demand or being pulled to collaboration.
Innovator: Texas REALTORS® is 104 years old and admittedly, we have many legacy programs and processes that could be made more efficient. This is the heart of one key aspect of innovation: seeking out opportunities to rethink processes, programs, or systems to make them more efficient to save time and money internally and/or more relevant to end users, whether those end users are internal staff or members (Service core value.) Innovators ask why we do things a certain way, what value does this have to staff or members, how could this be improved to make it simpler/more understandable/more relevant/more efficient/less expensive/etc.? Innovators also bring new value or resources to the table that add value to staff and member experiences. But, it's not enough to ask questions or offer ideas. Innovators ask the questions or offer ideas, then they put in the work to acquire buy-in and support for the idea and then take ownership to make the idea come to life (Ownership core value.)
Here are the answers to some common questions we get, and you may be thinking now:
Do Salary Grades cap our salaries? Yes and no. Yes because, again, jobs are assigned to Salary Grades based on market rates for the individual job. Each Salary Grade has a range with a minimum salary and a maximum salary, which does serve as a cap. However, without any other consideration, the entire Salary Grade structure is adjusted every year by a percentage that represents Wage Inflation for that previous year. That adjusts the minimums and the maximums and everything in between for each and every grade. So, even if a position always stays within the same Salary Grade, maximum earning potential within that grade adjusts upward over time. For example, in 2023, wage inflation was 3.6%. So in the third quarter of last year. the entire structure (not individual salaries) was increased by 3.6%. That increased structure was used for the Merit Matrix discussed above and it was also utilized for any new hires that came on during the last half of 2023.
Individuals do not always stay in the same Salary Grade. When there are promotions or significant changes in duties as prescribed by the association, changes in Salary Grades can occur, based compensation analysis for market rate. Also, the association conducts a rotational re-analysis of every single job in the organization. Every four years, every job will be part of this re-analysis. Through this process, market rates are re-analyzed and adjustments made where deemed appropriate. Particularly for jobs where market rates fluctuate more than others over time, this allows us to ensure that we are compensating appropriately.
Throughout this process, we've referred to "eligible positions." What does that mean? This is included in the association's Compensation Policy, but it's worth repeating here. Employees who had been employed by Texas REALTORS® for less than six months in the prior calendar year are not eligible for merit increases. This also applies to those whose positions were changed in the last half of the previous year. As was mentioned earlier, the updated Salary Grade structure was utilized to determine rates at which new employees are hired. Likewise for promotions or other off-cycle salary adjustments.
Why do we wait until April and what does retroactivity mean? Yes, salary budgets are set in the association's budget which was approved last September, and yes, we will always do everything we can to ensure that the whole team is paid fairly and competitively. We are a people business. But it's important to remember that while the budget is set, the association's revenue is heavily dependent on dues revenue...to the tune of about 80-85%. Because of the timing of dues collection, it's not until about the end of the first quarter until there is a solid indication of how dues collection is performing against the budget. This lets us know whether revenue supports the budgeted amounts. That's why the policy states that annual salary adjustments occur around the end of March.
But that's also why, for eligible positions, raises are retroactively applied back to January 1. When raises are finalized, you'll see an additional lump sum amount that represents the additional amount that would have been applied to previous 2024 paychecks had they been at the new, raised rate.
If you've read this far, first, thank you. Our priority in recent years has been to develop as much transparency around the compensation process as possible. It's why we partnered with a compensation consultancy, why we developed a formalized compensation structure, why we adopted compensation policies that are available for everyone to view and understand, why we adopted the Merit Matrix to help minimize subjectivity, why we hosted all staff meetings to explain the process and structure, why we invest in manager training, and why we write really long messages like this. We place the highest value on each and every one of you and are happy you are a part of the team. Remember that compensation is one piece the overall benefit of being a part of the Texas REALTORS® team. Combine it with great people, great benefits, flexibility, 401k matching, profit sharing and many others and we hope you can see the value the organization places on having a great team that works well together to make a difference in the lives and success of our members and consumers in the great state of Texas.
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