BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Pam Eastwood, Director of Human Resources
SUBJECT: Recommended Compensation for Town Employees for fiscal year 2006-2007
DATE: April 24, 2006
PURPOSE
The purpose of this report is to recommend compensation changes for Town employees for fiscal year 2006-2007.
INTRODUCTION
The Human Resources Department conducted a pay survey and a benefits survey in December 2005 to compare the Town’s pay and benefits programs with those area organizations with whom the Town competes for employees. See Attachment 1 and 2, pages 5 and 7 for survey reports. Detailed study and analysis was conducted by Town Human Resources staff and follow-up calls were made to respondents to assure accuracy and completion of data.
DISCUSSION
Summary of Survey Findings
The Human Resources staff analyzed the findings of the Town Pay Survey completed in December 2005. A total of 21 job titles were selected for use as benchmark classes for survey use. The selection and use of benchmarks is a standard means of compiling a survey sample which is representative of Town jobs as a whole.
Benchmark positions by definition either represent large numbers of jobs in the organization (such as Police Officers), or jobs found in a large number of departments (office support jobs such as administrative assistant) or jobs with pay rates which may change rapidly, such as Information Technology jobs.
Of the 21 jobs surveyed, a review of range midpoints shows that:
Three Town jobs (14 percent of survey) are more than 10 percent above the market average.
One Town job (four percent of survey) is more than five percent and less than 10 percent above the market average.
Eight Town jobs (38 percent of survey) are less than five percent above the market average.
Three Town jobs (14 percent of survey) are less than five percent below the market average.
Six Town jobs (28 percent of survey) are more than five percent below the market average.
In summary, nine (42 percent) of the 21 Town jobs surveyed have range midpoints which fall below the labor market average.
This is not a favorable position for the Town in terms of recruitment and retention. It is normal for the peer organizations surveyed to increase their pay rates within the first quarter of the fiscal year, which will result in all Town rates falling further below the labor market average.
Paying below the market average for Town jobs means that the Town is competing in the labor market with a substantial number of other employers paying more than the Town offers for the same job.
The Council took action in October 2005 by approving merit increases averaging 3.78 percent for employees. This helped move employees’ pay upward in their ranges; however, in some cases, Town employees’ average pay is still below average employee pay in other organizations for the same job.
About 65 percent of the Town’s employees are paid in the upper part of their pay range; this reflects the long service of many employees, with the average length of employee service exceeding 10 years. The pay ranges have not been adjusted since Fiscal Year 2003-04 and many employees are nearing the upper part of the pay grade. This situation does not compare favorably with actions taken by peer organizations surveyed. In the same time period, the majority of these organizations have implemented range changes. This results in Town ranges falling behind the average for the area labor market.
No step increase is recommended for the upcoming budget year. If the small group of special pay adjustments (recommended for some jobs in the Fire and Inspections Departments later in this report) are approved, the number of Town jobs surveyed falling below the market average will be reduced from nine to five.
This approval of special pay adjustment changes as recommended would assist in recruitment and retention for these jobs. We would anticipate the small number of jobs surveyed which remain about five percent below market average would be reviewed and considered for adjustment next budget year, if needed.
We recommend that the Council approve a pay range change of three percent for the coming year, which would provide a pay increase for all eligible employees. This would have a positive effect on average employee pay for all levels and would help maintain the Town’s pay ranges at a competitive level with the area labor market.
If these recommendations are approved, we believe the Town’s pay ranges and average employee pay will present a viable opportunity to jobseekers and enable the Town to maintain its workforce and meet citizens’ needs. No changes in benefits programs are recommended at this time.
RECOMMENDATIONS
We recommend the following actions be approved to be effective at the beginning of the first biweekly pay period which includes October 1, which begins September 26, 2006.
a. Authorize a three percent pay range increase and a three percent pay increase for all eligible employees.
We believe this pay increase amount is justified based on survey data and on changes in pay ranges for the region. This action, if approved, would adjust the pay ranges to allow future advancement for long-term employees, which would prevent pay compression between the long-term employee group and the more newly-hired employees.
Special Adjustments (Pay Grade and Employee Pay Changes)
After analysis of the December 2005 Town Pay Survey, three groups of jobs fell significantly below the area labor market with job rates or employee average pay of greater than 10 percent below the market average. These positions are in the Fire and Inspections Departments.
We recommend changes in pay or grade for the specific jobs shown in the chart below.
|
Department |
Title |
From Grade |
To Grade |
Cost for 12 Months |
Cost for 9 Months |
|
|
|
|
|
|
|
|
Fire |
Fire Captain |
38 |
40 |
52,257 |
39,193 |
|
|
Fire Equipment Operator |
34 |
36 |
52,673 |
39,504 |
|
Inspections |
Inspector |
33 |
35 |
2,800 |
2,102 |
|
|
Senior Inspector |
35 |
37 |
12,084 |
9,063 |
|
|
Inspector Supervisor |
40 |
42 |
3,671 |
2,753 |
|
Total |
|
|
|
123,486 |
92,615 |
Purpose of Grade or Pay Changes:
Fire Department: The purpose of the recommended changes in pay grade and pay increases for employees in the Fire Captain and Fire Equipment Operator positions of the Fire Department are to restore market competitiveness of these jobs for situations when outside recruitment is necessary and to address retention of the employees in this group. The pay range for this group of jobs has now slipped more than 10 percent below the market average, and in that situation, recruitment and retention are highly likely to be come problematic if action is not taken promptly.
Inspections Department: The purpose of the recommended changes in pay grade and pay increases for employees in Building Inspector positions and their supervisor is to restore market competitiveness of these jobs for situations when outside recruitment is necessary and to address retention of the employees in this group. This is a highly skilled and experienced group of employees, and loss of any due to job offers from other municipalities in the area would result in a major loss of productivity and effectiveness for this function.
COST OF RECOMMENDED ADJUSTMENTS*
|
|
Special Adjustment |
3% Range Increase |
12 month cost |
9 month cost |
|
|
|
|
|
|
|
General Fund |
123,487 |
747,702 |
896,317 |
672,238 |
|
|
|
|
|
|
|
Transportation |
|
230,780 |
230,780 |
173,085 |
|
|
|
|
|
|
|
Housing |
|
25,818 |
25,818 |
19,364 |
|
|
|
|
|
|
|
Parking |
|
15,635 |
15,635 |
11,726 |
|
|
|
|
|
|
|
Vehicle Maintenance |
|
13,936 |
13,936 |
10,452 |
|
|
|
|
|
|
|
Stormwater |
|
10,786 |
10,786 |
8,090 |
|
|
|
|
|
|
|
Total |
123,487 |
1,193,272 |
1,193,272 |
894,954 |
*Including benefits
CONCLUSION
We believe the recommendations presented here would be effective in recruitment and retention of excellent employees for the Town. We recommend that the Council approve these proposals, and will be pleased to provide any further information needed.
ATTACHMENTS