TOWN OF CHAPEL HILL

2003-2004 Compensation Study

 

SURVEY FORMAT EXPLANATION

 

 

The Town of Chapel Hill’s Council-defined peer group, as listed below, was surveyed March 28, 2003. 

 

–        Town of Carrboro

–        City of Cary

–        City of Durham

–        Durham County

–        Orange County

–        OWASA

–        City of Raleigh

–        UNC Health Care System

–        UNC Chapel Hill

–        Wake County

 

Data was requested for a total of thirty-four Town of Chapel Hill benchmark positions.  These positions were selected for comparison to the labor market by surveying the defined peer group who are likely to have similar jobs.  Positions from each department were selected.  Some of the positions chosen represent the largest sectors of the employee population.

 

Attached you will find a copy of the detail of the survey results.  Information was compiled by title for each responder as shown below: 

 

Columns:

1.      Our Title - Town of Chapel Hill’s title

2.      Their Title - Title of the responder.    If there was no match for the position “N/M” will be listed here. 

3.      # of EE’s - The number of employees per position

4.      Survey Hrs/Wk - Number of hours per week required for the position

5.      Minimum – Minimum of the salary range for each position

6.      Midpoint – Midpoint of the salary range for each position

7.      Maximum – Maximum of the salary range for each position

8.      Average Salary -   An average of salaries where there was more than one employee per respondent

9.      Survey Hrs/Yr – The respondents’ number of hours per week for each position multiplied by 52 weeks

10.  Town’s Annual Hrs – The Town’s number of hours per week for each position

11.  Average Hourly Salary -  The average salary divided by the respondents hours per year

1.      Average Annualized Salary – The Town’s annual hours/ week multiplied by the average hourly salary utilized for a better comparison of annual salaries for each position.  Example:  the number of hours required for the Accounting Manager position for the City of Cary is 40.  Yet the number of hours for that same position for the Town of Chapel Hill is 37.5.  The average salary was divided by the respondents’ number of hours per week to determine the hourly rate.  Then that hourly rate was multiplied by the Town’s number of hours (37.5).  This was done to be sure that salaries were equated for work schedule.

2.      75th % ile Midpoint – The value at which 75% of the respondents surveyed pay equal to or less than the midpoint for that position

3.      75th % ile Annualized Salary” – The value at which 75% of the respondents surveyed pay equal to or less than of the annual salary for that position

4.      Compa-ratio - A percentage used to express the relationship between the annualized salary and the midpoint. 

 

Rows:

1.      The organization name of each respondent is listed per title

2.      Average – An average for the information listed for each column

3.      Weighted Average – A calculation used to take into consideration the number of occurrences per response.  Example:  Although there were ten responses for the Accounting Manager position, there are a total of 31 employees in that position.  The number of employees is taken into account to get a more accurate picture.

4.      Town of Chapel Hill – The Town of Chapel Hill’s current position data

5.      Comparison – A comparison of the Town’s data to that of the weighted average

 

 

Town of Chapel Hill

Historical Review of Pay Plan

 

*      Previous System Mid 1980s to Early 1990

–        Perceived Advantages for Employees

*      Fast salary movement of new employees: salaries increased every 6 months

*      Relatively large increases for employee regardless of ratings:

–        Developmental range – Market annually plus 2 merits

–        Performance range – Above Expected Level rated employee received good raises

–        Perceived Advantages for Management

*      Stability – same system in place for a number of years

*      Turnover dropped to 7 – 8%

*      Frequent and good merit served as a good recruitment tool

*      Better performance could be awarded with larger increases

*      Everyone rated for same time period – fiscal year could be tracked and departments didn’t risk running out of merit money at the end of the year

 

–        Perceived Disadvantages for Employees

*      Fixed distribution of the number of Above Expected Level rating

*      Unhappy with supervisory evaluations, especially if not rated Above Expected

*      Some unhappiness with October rather than July implementation of increases

–        Perceived Disadvantages for Management

*      Fixed distribution of the number of Above Expected Level rating

*      Implementing all pay increases at once was a burden for larger departments

*      Limitation of granting small pay increases to employees who were at the range maximum

 

*      Experimentation with Change-Early to Mid 90’s

–        Perceived Advantages for Employees

*      Distinction between ratings:  Ratings were decreased from 5 to 4 to allow a greater increase percent

*      For employee in lower half of range increases were implemented as a percent of midpoint

*      Later increases were granted as a percentage of salary (to recognize longer term employees)

–        Perceived Advantages for Management

*      Ability to recognize performance with greater distance between increase percentage (previously 1% difference)

*      Annual implementation allowed for better tracking of funds

 

 

 

 

–        Perceived Disadvantages for Employees

*      Increases were granted annually versus every 6 months

*      Longer term and middle range employees felt there were over-emphasis on lower paid employees

*      Increases approved in July but not effective until October

–        Perceived Disadvantages for Management

*      Pay system difficult to understand

*      10% cap on number Outstanding ratings allowed

 

*      Review of Process Used to Develop Current Pay Plan-1998-1999

–        Phase I (Implemented 11-1-99)

*      In 1998 Council directed that a review be conducted of the way in which pay increases were granted

 

*      In 1999 a new pay structure was adopted: steps were established in the pay plan; employees received additional step increases to reduce salary compression

 

–        Phase II (Implemented 11-1-2000)

*      During 1999-2000 Consultants Condrey and Associates of Athens, GA, hired to conduct a labor market study

 

*      2001 New titles and salary grades adopted

 

*      Pay increases recommended for 2000-2001 based on performance:

below job- rate put onto step; at or above job rate – received average increase of 4.5%

 

*      Recent Pay Actions

–        2001-2002

*      Ranges were increased by 1.5%

*      Eligible employees on step/below job rate received a 3.78% increase November 1, 2001

*      Eligible employees at or Above Job Rate received the following increases based on performance rating:  1.5%, 3.75%, 4.5%.

 

–        2002-2003: State withheld funds

*      Ranges did not move

*      3.78% step increase was implemented December 1, 2002 for employees on step/below the job rate

*      Employees at or above the Job Rate were eligible for 3.78% performance increase implemented December 1, 2002

 

DEFINITIONS OF KEY COMPENSATION TERMS

 

 

*      Compensation Policy: The strategic and philosophical principles that guide design, implementation and administration of an organization’s compensation programs.

 

*      Compensation Strategy: The actions and decisions which support an organization’s business objectives and specify what programs will be used and how they will be administered.

 

*      50th Percentile of Market (or median): The value at which 50% of employers surveyed pay less and 50% pay more.

 

*      75th Percentile of Market: The value at which 75% of employers’ surveyed pay equal to or less.

 

*      Internal Equity: A fairness criterion that implies an organization’s pay practices correspond to each job’s value in the organization.

 

*      External Equity: The alignment of an organization’s pay levels for specific jobs to be competitive with the amount paid for the same or similar jobs in the defined labor market.

 

*      Compa-ratio: The current salary of an employee divided by the current market average and expressed as a percentage (a compa-ratio of 90% would indicate that the employee’s salary is 10% below the current market rate average.) Compa-ratio can also be used to express the relationship between the employee’s salary and the current midpoint or Job Rate of the job.

 

*      Pay compression: A situation when the pay rates of several employees, despite clear differences in performance and/or experience, are tightly clustered.

 

*      Benchmark jobs: The positions selected for comparison to the labor market by surveying organizations likely to have similar jobs.

 

*      Recruiting Market: or Recruitment Area: The segment of the national labor market from which an organization hires its employees.  Different jobs may have different markets depending on the skill sets being sought.