AGENDA #2e
OUTLINE FOR MAY 21 MEETING
INTRODUCTION AND OVERVIEW OF PRESENTATION
Purpose of Presentation: Our goals are:
I. Purpose of Compensation Programs
To recruit and retain excellent employees by providing good pay.
Reasons this is important to the Town
Citizens and Council expect excellent and caring service by all departments and functions. Essential resources are best used and desired outcomes are best achieved when employee turnover is low, and employee morale, productivity and quality of work are high.
Consistent and reliable employee performance, essential organizational memory, and depth of employee capability to effectively manage usual and exceptional demands are key elements of a high quality employee group. The Town currently has an excellent employee group.
Town employees represent the single largest element of the Town budget and are the most critical single aspect in the Town’s ability to provide effective services. Maintaining the Town’s reputation as a quality employer and building on this reputation for the future is essential to achieving the Town’s service goals for its citizens.
Achieving and consistently maintaining good competitive pay is the means by which these essential outcomes are achieved. Average pay in the market will result in average to poor employees being hired. Allowing pay ranges to fall behind the Town’s target level in the market will have negative and long-term results, which are difficult and expensive to repair.
Allowing valuable, well-trained competent employees to leave Town employment to join other area employers for higher pay will cost the Town in tangible and intangible ways.
We believe the Council understands the value of attaining and continuing the Town’s reputation as a quality employer which treats employees fairly and recognizes high-quality work with good pay. This expectation by employees, along with the Town’s benefits program, will retain high-quality employees when the economy improves and other job opportunities expand in this area.
We believe that allowing Town pay levels and employee pay to slip below the desired target rate during a slower economic period will result in employee dissatisfaction, feelings of poor treatment and will lead to employee willingness to make a change when the economy improves. Our recommendations are based on the belief that paying people fairly is always the right thing to do and will result in a loyal and committed group of employees for the Town.
II. Goals To Accomplish This:
Align and maintain Town Pay Ranges with the 75th percentile of the labor market
Align and maintain Town employee pay with the 75th percentile of the labor market
III. Expected Outcomes
Lower rate of turnover among Town jobs
Higher quality applicants when recruiting
Shorter recruitment duration
High-quality work performance and results
IV. Survey Findings
· Other organizations surveyed made a variety of pay changes during this fiscal year, ranging from 0 to 10% and containing features of range changes, merit pay, Cost of Living adjustments and combinations of these. The Town’s conservative actions in granting 3.78% increases to employees and not changing pay ranges are on the lower side of these comparisons. Action is needed to adjust both pay ranges and employee pay to current market levels.
· We found varying changes in jobs versus surveyed market comparisons:
Some jobs surveyed are near the 75th percentile (examples: Transit Operator, Maintenance Mechanic, Construction Worker)
Some jobs surveyed fall significantly below the market comparison (examples: Fire Equipment Operator, Police Officer I and II)
The combination of strategies we chose, which are described below, are designed to bring the Town jobs from this currently varied distribution versus the labor market into an aligned distribution with the market involving the least required expense.
V. Review of Strategies to Accomplish Goals in FY 2003-2004
The recommendations below are presented as a package and are inter-related; changing one action will have an impact on the others. They are presented in the recommended order of sequence; each is key in relation to the next as they combine to achieve the goals listed above.
PART I
Town-wide Actions: Ranges and Grades
Approve 2% Range Change for all ranges
Purpose: This amount was selected after all survey comparisons were completed. To maintain the structure and integrity of the Town Pay Plan, range movement must be uniform. The 2% amount moderates the impact of the uniform adjustment and provides the foundation for the other recommendations below.
Grade Change for Selected Jobs
Approve grade changes (reassignment of pay range to a higher level in the Pay Plan) for jobs found to be significantly low against survey data (list to follow).
Purpose: to maintain Town pay ranges at competitive levels with the market. These jobs were determined to fall more than 10% below the market comparison after the 2% range change was applied.
PART II
Town-wide Actions: Employee Pay
· Recommend 2% Pay Range Increase for Below Job Rate employees
· Recommend 3.78% Step Increase for Below Job Rate employees
· Results in a total of 5.78% Increase for Below Job Rate employees
· Purpose: to maintain employee pay at competitive levels with market target
These actions would make pay changes which would move these employees through their pay range toward the market midpoint or Job Rate for their position. The 3.78% amount is the value of the step designations in the first part of the pay range. It was selected for this reason, to apply the Pay Plan in a consistent manner from year to year. This amount was decided when the Pay Plan was initially implemented and is important to continue to maintain internal equity and structure.
· 4.5% Performance Pay Increase for Above Job Rate employees
· Purpose: to move long-term employees through the upper part of the pay range.
· This provides performance pay for this group and also distributes them in the pay range to avoid being overtaken by the Below Job Rate group, which would create pay compression overall. This amount was selected to create a correction for the lack of differential found in the prior year’s pay adjustments for these two employee groups ( Below Job Rate and Above Job Rate employees received the same amount increase in Fiscal Year 2002-03, due to budget constraints).
PART III
Special Pay Actions Needed:
Additional pay adjustments for employees in 6 job classes
Purpose: To align employee pay in new ranges to allow effective recruitment at new range minimums. These adjustments would occur primarily in the lower levels of the Police and Fire career progressions and would distribute the current employee group at a point in the new higher pay ranges to allow recruitment to occur at the new higher minimum (which was adjusted to be aligned with market).
Note: After further evaluation, prior staff recommendations for change to Accounting Technician, Payroll Technician, and Accounts Payable Technician have been withdrawn; thus the total number of adjustments and the total cost recommended is less than presented in the April 30 documents.
VI. Summary of Costs
These are shown in the Total Cost for Proposed Actions chart (page 30) by Fund, by purpose, for Fiscal Year 2003-04 and on an annual basis.
Proposed 2003-04 Schedule of Salary Ranges with Definitions
Definitions and Terms Relating to Compensation
Part I: Range Comparison: Town to Market
Part II: Special Changes Recommended to Employee Pay