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Home My WebLink AboutComp and Class Overview 20220727Administration Committee Comp & Class Study July 27, 2022 Video Memo for Administration Committee Meeting July 27, 2022 1 Agenda Overview Implementation Special Cases Overview – Background on How We Got Here Implementation “Meat and Potatoes” of Today’s Discussion Options and Recommendations Special Cases Not Quite Part of Implementation But Still Important for Administration Committee to Consider 2 Overview Goals of Study Hired a Consultant Study Process Brief Recap 3 Goals of Comp & Class Study Update City’s Compensation System Competitive Wages – recruit and retain employees Formalized Structure Internal Consistency Pay Equity Compliance FLSA and ADA Compliance Benefits and Policies City Council and Mayor Compensation City’s Last Comprehensive Study 1999-2000 City’s Last Significant Review 2006-2007 Very Tight Labor Market Wages Cited as a Factor for Some Recent Employee Departures Also Cited a Couple Times When Trying to Hire Someone Compliance with State and Federal Laws 4 Hired a Consultant Expertise Hay Method Pointing Pay Equity Greater Data Access ERI Data Benefits Employee Bandwidth Neutral Third Party Much More than Just Pulling LMC Wage Data Expertise, Efficiency, and Additional Data Employee Bandwidth – Already 50-60 Hours Neutral Third Party – Avoid Misperceptions of Favoritism RFP 6 Responded Hired Abdo Solutions 5 Study Process Position not the Person Job Descriptions Hay Method Know How Problem Solving Accountability Special Conditions Pointing This is the Market Market Data Grades and Steps Place Employees into the Market No Loss in Pay No Loss in Steps Process Described Elsewhere The Study Represents “This is the Market” Initial Placement of Employees No Loss in Pay No Loss in Steps from Top End – Recognize Experience 6 Compensation Philosophy – Step & Grade This Is What It Looks Like Step and Grade Model Market Data Determines Min and Max Extremely Common in Public Sector Hastings Has Used a Step System Since At Least 1999-2000 (over 20 Years) 7 Compensation Philosophy – Step & Grade w/ Employees Hypothetical Employees into the Market No Loss in Pay No Loss in Steps from Top End 8 Implementation Step & Grade Plan Compensation Philosophy Union Negotiations Budget Impact Employee Communications & Listening Sessions Implementation Key Discussions About Compensation Philosophy and Budget Impact 9 Compensation Philosophy – Step & Grade w/ Employees Same Base Chart You Just Saw 10 Compensation Philosophy – 5% over market I’ve Heard Some Comments to Pay Above the Market Average Here the Basic Structure is the Same, but the Numbers are 5% Higher Advantages: More Competitive Recruiting AND Retaining Built In Cushion During Volatile Labor Market Might Alleviate Concern about Employees Already Above Market Disadvantages Greater Budget Impact Change from Previous Target of “At Market” Tough to Later Say Target is “At Market” 11 Compensation Philosophy – Higher Starting Wage Another Option Might Be to Cut the First Two Steps in Order to Have More Competitive Starting Wage Here the Blue Circles Show Hypothetical Employees Moved Up to the New Step 1 Advantages: More Competitive in Recruiting Quicker Employee Advancement to Top End Relatively Small Budget Impact Incorporates Reality that Few Employees Currently Hired at Step 1 (Step G) Disadvantages: Some Compression Among Recent Hires – eg Someone Hired 2 Years Ago Still 5 Steps from Top End but Now On Same Step as a Brand New Employee 12 Compensation Philosophy – Fewer Steps A Different Perspective on Six Steps is More Complicated Again the Blue Circles Indicate Hypothetical Employee Changes from the Prior Base to this Model. This Keeps the Market Min and Max, and Redistributes the Middle Steps Advantages: Quicker Employee Advancement to Top End Disadvantages: More Complex Initial Set-Up Greater Budget Impact 13 Compensation Philosophy – Retroactive Pay This is the Original Model Again I’ve Heard a Couple Comments About Possibly Making Wage Adjustments Retroactive, Presumably to First of Year Note: Budget Impact Discussed Later in Memo is Based on Retroactive to July 1 Advantages: Right Now – Assume Full Budget Impact in 2023 Anyway Disadvantages: Much Greater (Double) Budget Impact (One-Time Expense) 14 Implementation – Union Negotiations Police Officers Police Sergeants Already did 1% effective 7/1/2022, pending completion of Comp. Study Firefighters Fire Captains Parks, Public Works, and Custodial Union Wages Will Be Negotiated Separately Reopeners Based on the Study and City’s Compensation Philosophy 15 Implementation – Budget Impact Estimates (subject to change) $ 343,767 half-year market (2022) $ 687,534 full-year market (2023) $ 37,500 additional steps in 2023 $ 21,751 COLA (3%) in 2023 $ 9,566 Longevity in 2023 $ 126,232 PERA and FICA in 2023 $ 882,583 TOTAL in 2023 $ 825K general fund and $58K utilities What is City Council’s budget threshold? Options for Phasing in Over 2-3 years? With some very important clarification, the cost to implement the study is much more expensive than discussed at City Council last week. We have budgeted $200K of ongoing funds toward implementation. Unfortunately, the half year (July to Dec) in 2022 is around $350K. And with a full year in 2023, the cost is almost $700K. As a percentage of payroll, it doesn’t sound too bad at 7.6%, but it is a big number. Plus adding on steps and COLA for a year later, plus PERA and FICA, bring the full year total to $882K. Which brings us to 2 very important questions: 1 – What is the City Council’s budget threshold for implementation? 2 – What are options for phasing this in over the next 2-3 years? Answering these questions will probably go beyond tonight’s meeting. 16 Implementation – Employee Communication Status Updates at Key Steps Involved in Job Description Review Listening Sessions Involved from the Start Updates at Key Points in Process Directly Involved in Job Description Updates Intend to Hold Listening Sessions Make Sure They Understand Learn and Correct Mistakes Not Just Somebody Unhappy This is the Data It’s About the Position in the Market, Not the Individual 17 Special Cases Employees Already Above Market Rate Highly Competitive Positions Employee Benefits as Part of Overall Compensation Package Mayor & City Council Wages Not Part of Implementing the Step & Grade Model But Important to Consider and Recommend 18 Special Cases – Employees Above Market Freeze COLA Raise the Pay Scale Above Market Rates More Frequent Compensation Review Premise That No Current Employee Would See a Pay Cut Due to the Study Handful of Employees are Actually Above the Top of Market Tend to be in Lower-Mid Grade Positions Obviously No Steps for Them to Advance Some Cities Freeze These Positions – Essentially Waiting for COLA to Increase the Pay Scale for a Year or More Until It Catches Up with the Employee Or, Some Cities Continue to Provide COLA, With the Thought that Over a Longer Horizon the Market Will Eventually Catch Up Another Option, As Mentioned Earlier, Might Be a Compensation Philosophy Paying All Employees Above the Market Rate This Would Reduce (Maybe Eliminate) the Gap an Employee is Above the Scale Of Course, It is a Relatively Expensive Option Since it Increases the City’s Payroll Overall Another Option Which Doesn’t Really Address It, Is to Simply Keep an Eye On It Whether Freezing COLA or Allowing It for These Employees, More Frequent Review of Market Wages Can Make Sense 19 Special Cases – Highly Competitive Positions Comp Study – Make Sure We’re Competitive in the Market Signing and Retention Incentives Potential Pay Equity Implications More Frequent Compensation Review A Goal of Comp Study is to Make Sure Hastings is Competitive in the Market Very Tight Labor Market Some Positions Highly Competitive Some Cities Having Trouble Recruiting Positions – Raise Pay Rate, Signing Bonuses, Retention Incentives Earlier This Year, Hastings Offered Signing and Retention Incentives for Building Inspectors Potential Pay Equity Implications Recognizing that the Labor Market is Extra Volatile Around These Positions, It Makes Sense for More Frequent Compensation Review to Keep an Eye on the Market and Maintain Competitiveness 20 Special Cases – Mayor & City Council Statute requires ordinance to take effect after general election Last updated 2014, effective Jan 2015 Tech Stipend should be incorporated in new ordinance Discussed Dec 2021, Included in Study State Law Requires Ordinance to Take Effect After General Election Last Updated in 2015 Now Mayor $750 Below Peers and City Council $500 Below Tech Stipend Should Be Included in Ordinance 21 Administration Committee Comp & Class Study July 27, 2022 22