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Consideration of the implementation of a modified compensation plan for non-represented employees
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Submitted by:
Beth Mbow
Department:
Human Resources
Background:
The City contracted with Carlson Dettmann, a professional compensation consulting firm, to conduct a compensation plan study and to objectively develop a pay range and structure based on the City’s needs.
The objectives of the new compensation program are as follows:
• To develop and maintain pay structures that will enable the City to attract and retain qualified staff.
• To have a flexible compensation program that can meet current and changing economic and hiring conditions over the next several years.
• To maintain pay relationships among positions that are internally consistent in recognizing important relative differences in position responsibilities and requirements.
• To establish and maintain pay levels that will compare favorably with salaries paid by other employers in the City’s employment area, for positions of similar responsibility.
• To follow the principles of equal employment opportunity (EEO), basing differentials in pay solely on qualifications, position responsibilities and meeting performance expectations without regard to non-position related attributes such as race, color, religion, sex, age, national origin, marital status or any disability which does not preclude the effective performance of position accountabilities.
Methodology
The proposed compensation plan was determined based on combining principles of objective job evaluation and accurate market measurement.
Job Evaluation
The objective job evaluation process involved the application of a Point Factor Job Evaluation System using current job documentation and leadership input. Job Evaluation is a systematic method of determining the internal relationships of positions within an organization. This process involves detailed analysis of a position to determine its requirements, assigned responsibilities and influence on the organization’s operations. Evaluation factors are:
• Formal Preparation and Experience
• Decision Making (Impact)
• Thinking Challenges/Problem Solving
• Interactions and Communications
• Work Environment
Market Analysis
Market analysis was inclusive of compensation practices for similar positions at comparable organizations, as well as organizations in the competitive geographic market. This market analysis was completed using published private and public sector compensation surveys and sources where the market data is provided by employers matching their information to survey job descriptions, as well as, through a custom survey of other public sector organizations. The survey sources utilized through the consultant’s survey library provide data that is administered on a recurring basis which ensures we can repeat the study using consistent methodology in the future.
Pay Plan Structure
To facilitate effective administration of the compensation system, a pay structure has been established for non-represented employees (employees not represented by a collective bargaining unit). The City needs to be able to compete in the current economic and employment environment where there is a challenge to find and retain qualified talent. Due to these factors, the control point or pay target was set at a blend of the 50th and 75th percentile to provide a competitive edge against those targeting the median, and the minimum of the structure was set at 90% of the control point to provide competitive starting rates.
Grade Levels
The pay structure consists of a set of levels of responsibility, or grades. A sufficient number of grades have been established to recognize important relative differences in position responsibilities and requirements, from the lowest to the highest-level position in the structure.
Assignment of positions to grades is accomplished through the evaluation of each position and the matching of certain positions to applicable employment market rates. The placement of positions to grades is consistent across exempt and non-exempt roles.
Pay Ranges
Each grade is assigned an appropriate Pay Range, based upon market pay data for the positions in that grade. The pay range control points are derived from a blend of the 50th and 75th percentile market measurement.
In the pay structure, the percentage spread from pay grade to pay grade reflect the level of increasing complexity and autonomy found within the role. In addition to this, the range width is meant to represent a reasonable range progression with steps calculated at 2% of the control point providing a pathway from the minimum to the control point. The steps reduce to 1.5% of the control point from the control point to maximum. These ten steps beyond the control point support organization tenure and recognize staff for increased experience and strong performance.
Structure Maintenance
The pay ranges (wage scales) will be adjusted each year with the budgetary COLA (cost of living adjustment) which will be recommended by City Administration during the budget cycle, based on inflation, market conditions and affordability. This is an important aspect as this scale adjustment is what will keep our pay ranges in alignment with the current market.
The salary structures will be measured against market data approximately every three years and adjusted as necessary to assure that competitive salary ranges are maintained. This process will also allow the City to respond to individual benchmark positions that may be moving in the market at a faster pace than other roles.
Fiscal Impact:
The 2024 cost of implementation, effective 6/16/24, is $172,715 (annualized cost is $345,431). We have budgeted undistributed payroll dollars for this implementation. There is no other immediate budget impact. Future year adjustments (COLA’s) to the wage scales will be presented during the annual budget.
Recommendation:
1. Staff recommends adoption of the modified non-represented employee compensation plan framework:
- Step system consisting of 20 grades, each consisting of 16 steps with the control point (100% of target market) being at step six
- Step one starts at 90% of control point and step 16 is 116% of the control point
- Plan structure based on a 50/75th percentile blend of our comparable market
2. Staff recommends approval to authorize City Administration to implement and manage the compensation plan for non-represented employees.