SUMMARY MINUTES OF A WORK SESSION OF THE

CHAPEL HILL TOWN COUNCIL

THURSDAY, JUNE 18, 1998, AT 6:00 P.M.

Mayor Waldorf called the work session to order at 6:05 p.m.

Council Members in attendance were Flicka Bateman, Joyce Brown, Pat Evans, Kevin Foy, Julie McClintock, Lee Pavão and Edith Wiggins. Mayor pro tem Joe Capowski was unable to attend. Staff members in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Personnel Director Pat Thomas and Town Clerk Peter Richardson.

Mr. Horton noted that Personnel Director Pat Thomas and consultants Bob Slavin and Jill Pilot were at the Council’s disposal this evening to receive input about a study of the Town’s compensation system.

Mr. Slavin noted that his firm was based in Atlanta and had worked in all but two states, North Dakota and South Dakota.

Ms. Pilot said that the purpose of the study was to define the Council’s compensation philosophy and values. She said that Mr. Slavin and herself would collect and analyze data on the Town’s existing compensation system and how it evolved to its present status. Ms. Pilot also said she would collect and analyze data from Research Triangle Park employers about compensation practices and ultimately recommend a compensation system to the Council.

Ms. Pilot reviewed each of the following stated objectives with the Council:

(1) A pay system and awards program that is consistent with department methods for evaluation.

Council Member Pavão noted that some Council Members were not happy with the current complexity of some departmental evaluation methods. He said it would be desirable to have a fair, simple and more direct approach that was consistent with the proposed new evaluation system.

(2) A pay system that is simple to understand.

(3) A pay system which provides cost of living increases in a regular progression for each employee within his or her pay classification.

Council Member McClintock said she favored having more money devoted to cost of living increases than other pay increase components.

Ms. Pilot inquired whether or not a step plan was being proposed. Council Member McClintock said that the federal government had a simple step plan which was easy to understand.

Ms. Pilot said that the Town, and many other local governments, had open range pay plans.

Mayor Waldorf asked whether or not step plans were a good type of plan. Ms. Pilot said that a step plan might or might not be good for the Town. She noted that although the federal government and unionized employers used step plans, they tended to be inflexible and were quite expensive to implement.

Council Member Pavão said that raises tended to become viewed as a “right” under step plans. He expressed concern that step plans detracted from the flexibility of awards programs.

Council Member McClintock said that predictability should be tied to cost of living increases for Town employees.

Council Member Wiggins said although it was important to provide a mechanism for annual cost of living increases, she wanted to hear the consultant’s recommendations regarding ways to handle the implementation of such increases. Ms. Pilot said she would be pleased to provide information about various ways for handling cost of living increases.

Council Member Bateman suggested the possibility of examining the State of North Carolina’s step system.

(4) Each employee receiving an acceptable or better performance evaluation would receive a cost of living increase in pay each year.

Ms. Pilot suggested combining objectives three and four. There was Council concurrence to do so.

(5) Have a pay system without too much compression.

Ms. Pilot said it was almost impossible not to have at least some compression in a pay system. She noted that there was a lot of compression in the Town’s present pay system. Ms. Pilot said it would take some time and money to sort out the present situation.

(6) A pay plan in which we set higher than market levels of base pay for lower pay classifications.

Ms. Pilot asked the Council to think about the message that this objective would send to higher skilled employees. She noted that the classification system established the hierarchy of positions.

Council Member McClintock said she believed that the Town was liberal thinking and progressive and had a higher cost of living than many other communities. She also said it would be helpful to receive the consultant’s recommendations about how to address this matter. Ms.
Pilot said that each time the Council had addressed this concern in the past, another one or two problems had been created. She also said she would be pleased to provide the Council with some recommendations to deal with these concerns.

Council Member Wiggins, stating that all Council Members wanted lower-skilled employees to make a fair wage, said that employees across the entire spectrum deserved good salaries for their work.

Mayor Waldorf said that the Council would be open to receiving any recommendations from the consultant about additional training opportunities or other forms of recognition for Town employees.

(7) A pay system in which it is possible to provide to employees and the Council projections for future earnings.

Mayor Waldorf stated that the Council was asking for an aggregate figure.

(8) Update Job Classifications on a regular basis.

Ms. Pilot said although this was an excellent idea, it was beyond the scope of the study.

(9) Reward employees for longer service to the Town.

Ms. Pilot inquired whether or not the Council wanted some options to address the fact that compression was hurting longer-term employees. There was Council concurrence for the consultant to provide appropriate options.

(10) Develop options for employees at the top of a salary range.

Ms. Pilot inquired about the genesis of this objective. Council Member McClintock said employees at the top of their salary ranges were experiencing compression.

Ms. Pilot noted that the pay range defined the relative worth of a job.

(11) An awards program which is separate from the pay system and does not undermine the principles outlined for the pay plan.

Council Member McClintock said that it would be desirable to review options since the merit and awards were melded in the Town’s current system.

Ms. Pilot said it was quite common for pay, longevity and merit to be paid together in one package.

Council Member McClintock said the Town needed to have a system which was simple to understand and which had a separate award system not built into base pay.

Council Member Evans said she wanted the Town to build a culture in which teamwork was important, but one in which individual skills and abilities were recognized.

Council Member Wiggins said she wanted to see the consultant’s options for a simple system and its related advantages and disadvantages.

Council Member Pavão said that a fair pay plan was needed to reward employees for providing good service which was out of the ordinary.

Council Member Wiggins said she was concerned about whether or not bonuses or awards would be used in calculating employee’s retirement formulas.

Ms. Pilot said it would be used in terms of earnings, but would not be guaranteed from year to year.

Council Member Foy said he favored having a system in which all employees would have an opportunity to receive a bonus or award.

Council Member McClintock said she favored having bonuses or awards which were granted on a per occasion basis and did not build into the base pay of individual employees. She also said she would be interested in knowing how other municipalities and the State of North Carolina handled these matters.

Council Member Bateman suggested the possibility of having a merit-based system with seven steps in each classification, with a cost of living increase superimposed over the step system increases.

Council Member Evans said this was an interesting way of doing things.

Council Member Wiggins requested that the consultant provide the Council with definitions for terms such as “cost of living increases”, “bonuses” and “awards”. Ms. Pilot said she would provide such a listing of definitions and two or three options regarding awards program options.

(12) An awards program designed by the Manager and approved by the Council from a separate pot of money designated by the Council each year in the budget.

Mayor Waldorf suggested that the Council receive recommendations from the consultant about the development of an awards program.

Council Member McClintock said it was important to get input from Town staff.

Mayor Waldorf requested a clarification of the term “award” in this context. Council Member McClintock said the term was used to differentiate between cost of living increases and increases for merit or special innovations.

Council Member Foy said he favored a program which was sufficiently flexible for all employees to potentially receive some sort of award or bonus.

Council Member Evans said that the Council needed to establish goals in order to take the matter out of the political arena.

Mayor Waldorf concurred that the Council needed to establish certain policy goals.

(13) Pot of money designated for awards program is minor as compared to amount of funds designated for cost of living increases in the pay plan

Ms. Pilot inquired about the rationale for proceeding in this manner. Council Member McClintock said that cost of living increases served as the underpinning of stability of Town employees receiving satisfactory or better evaluations on an annual basis. She added that a number of Town employees were unhappy with the Town’s present system for awarding annual pay increases.

Council Member Wiggins said that this argued for having a better evaluation system.

Council Member Pavão suggested that the consultant report back to the Council with options for revamping the Town’s existing system. Ms. Pilot said that Mr. Slavin and herself would present such a series of options to the Council.

Ms. Pilot said she heard the Council reacting with frustrations to several elements of the current system. She also said the Council appeared to want a system which was effective, easy to understand and would cause a minimal amount of discontent among Town employees.

Mayor Waldorf said she felt that the percentages set aside for awards and cost of living should be more or less equal in terms of percentages.

Council Member Wiggins concurred, stating that Town employees should be paid fairly across the spectrum for their work.

Ms. Pilot presented a brief review of the proposed project methodology and time frame, including meetings and focus groups with Town employees. She stated that preliminary findings would be presented to the Council in September, 1998, with a final report possibly being presented as early as October, 1998.

Mr. Slavin asked whether the term “award” applied to everything other than “cost of living” increases and base pay. There was Council concurrence on this point.

The work session concluded at 7:35 p.m.