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Home My WebLink AboutIR 8184 INFORMAL REPORT TO CITY0'JUNCIL MEMBERS No.- 8184 Terms To the Mayor and Members of the City Council April 6, 1999 Subject: Compensation Report On August 25, 1998, the Mayor and City Council directed staff to review the City's compensation plan and develop recommendations for the long-term fair and equitable compensation of all employees. The concern of the Mayor and City Council members were focused primarily on the following issues: • The degree of salary compression in the current plan; • The disparity of actual salaries of City employees in comparison to those of other jurisdictions; • Compensation for civil service employees, particularly the market policy (i.e., what are the comparable jurisdictions and is the comparison to the median salary appropriate?); • The role of employee tenure versus performance in determining salary rate. It was suggested that input and guidance be solicited from other public and private organizations to help provide direction for this effort. To this end, a compensation committee composed of experts in this field was formed. The individuals who participated on this committee are listed below. • George Berger, Vice President Human Resources—Tandy Corporation • Kyle Horsley, Senior HR Consultant—DFW Airport • John Verdier, Compensation Manager—City of Austin • Bill Melton, Director of Compensation—TU Electric • Karen Wresinski, Staffing and Compensation Director—Union Pacific Resources • Charles Linberg, Compensation Director—Burlington Northern & Santa Fe Railroad • Bob Brandhorst, Consultant—The Whitney Smith Company In addition to these committee members, Jim Keyes, Director of Fiscal Services, and Bridgette Garrett, Budget Manager, as well as staff of the Human Resources Department participated in Committee activities. ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS . .......... ------------ r INFORMAL REPORT TO CITY'—JUNCIL MEMBERS No.— 8184 TERFO April 6, 1999 To the Mayor and Members of the City Council Page 2 of 5 - 1873 Subject: Compensation Report The focus of the Compensation Committee was: • to review the Fort Worth pay plan and identify problems; • to evaluate the appropriateness of compensation plan types for various worker groups; • to evaluate the City's compensation policies; and • to recommend future directions for the City's compensation plan and policies. The Compensation Committee met three times beginning in November 1998. The following detailed information was provided to each of the Committee members: • Summary of the history of the compensation plans in the City since 1983; • Compensation/benefit statistics; • Compensation policies; ell • Pay differentials between the various, staff levels; • Breakdown of staff levels and percent of budget; • History of pay range and salary adjustments; • Retirement history and information; and, • City's contribution for various benefits. The Compensation Committee identified the following issues and recommended solutions: 1. The Committee recommended that the City consider different pay plans for specific job groups. More specifically, the Committee suggested that a step plan for Labor/Trades classifications and Clerical classifications (non-exempt classes) be created. The Committee stated that a reward system based on tenure (step plan) was more appropriate for these types of jobs than a pay-for-performance system. The difficulty of differentiating performance levels in jobs requiring fewer skills does not lend itself to a performance pay plan. In addition, a step plan would facilitate the dispersal of the compression problem that currently exists in the beginning quintiles of the ranges. Step plans also increase the probability that longer tenured employees will be higher in salary 01011" than most new hires. The Committee suggested that initially one or 4WJ4P5"U1 be identified and placed into step plans. The Committee also recd ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS ............. INFORMAL REPORT TO CI JUNCIL MEMBERS No. 8184 C,,kWT 'FO April 6, 1999 To the Mayor and Members of the City Council Page 3 of 5 X Subject: Compensation Report of annual step increases be automatically built into the budget to ensure maintenance of the step plan. 2. Another recommendation of the committee was to review the width of the salary ranges for the pay plans. In general, the Committee members felt that the current salary ranges were too broad for some of the types of jobs found in the City. Some of the members believed that the upper end of the salary range for the skill level required in these positions was not reasonable in comparison to market rates for the jobs. Such a high salary could create unrealistic expectations among employees and create the perception that they are "underpaid." In addition, since it is more difficult to differentiate the level of performance at lower job levels, the committee believes that it is not reasonable to pay one employee $8.63/hour (entry level) and another$13.00/hour(maximum level) for the same skills in the same classification. The committee felt that a 20%--40% spread in the salary ranges for most non-exempt classifications is sufficient. 3. The Committee suggested that the appropriate job market should be used to compare each job group for salary purposes. To identify the appropriate job markets, it was recommended that the City consider the employers to which it loses employees and from which it hires employees. Different job groups may have different job markets for the purpose of salary comparison. Salaries for executives may be best compared on a national basis, while clerical salaries may be best compared to what is paid by organizations in the local job market. 4. Once the comparable job markets are selected, the Committee strongly suggests that Fort Worth decide how the City's salaries will be compared to other salaries in the appropriate market. The City must decide at what level it will set the market value or reference point for its jobs in comparison to the market values of competing organizations' salaries. The reference point may be set at the market median or at any percentile of the range of market values. Fort Worth, as most other cities, set their reference point at the market median. 5. Another recommendation of the Committee was to "age" or forecast all salary survey data for at least one year in order to stay competitive within the chosen market. r; pp 0, FE 7�/� ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS .......... ...................._______...... INFORMAL REPORT TO CITY� jUNCIL MEMBERS No. 8184 April 6, 1999 To the Mayor and Members of the City Council Page 4 of 5 or Subject: ion Compensation Report It is a fact that most survey data has already aged at least one year by the time Fort Worth implements any new salary changes. Fort Worth continuously lags behind other jurisdictions' salaries. To forecast salary survey data, it will be necessary to consider cost of living adjustments or the average percentage of past salary adjustments from other market organizations. 6. The committee also recommended that the City consider marketing the concept of "total compensation" to employees. It was suggested that employees be encouraged to consider their benefits as being part of the total employee compensation package. If this is accomplished, it will facilitate the recruitment of new employees and retention of current ones. This last recommendation of the Committee dovetails into an evaluation of City benefits that Human Resources staff were conducting during the same time period. This evaluation was 00p, initiated by City Council members' comments concerning"family-friendly"benefits and the role of such benefits in attracting and retaining employees. The major recommendations relating to benefits were discussed with the Employee Benefits and Insurance Advisory Committee on January 21, 1999 and received their endorsement: • Personal Leave Sell-Back—Increase from 40 hours to 80 hours per year. • City sell Long Term Care Insurance—with its large employee base and payroll deduction, we could make this benefit available at the employees' cost with presumably little cost to the City of Fort Worth. The Employee Benefit and Insurance Advisory Committee is already working on a proposal. • Initiate Dependent Care/Health Care Spending Accounts—Currently, the City only has Flex 125 just for insurance premiums. The additional tiers of the program should be expanded. • Adoption—Adoption fees are expensive. A possible option includes allowing the employee the same dollar figure as employees use for insurance for a normal vaginal birth, perhaps minus what an employee would pay on their premiums. • Nursing Mothers—The City could have a Personnel Policy which urged the employer to be flexible in the use of breaks, lunch and leave time for on and off site nursing. • Take Our Daughters/Sons to Work Days—The City needs to develop policy guidance for departments on establishing a learning/exploratory program for the visiting children. • Financial Planning/Retirement Seminars—The City should increase the training offered in this area. This includes raising awareness of the City's Deferred Compensation programs, V%,b ISSUED BY THE CITY MANAGER S INFORMAL REPORT TO CITY 6,jU' NCIL MEMBERS No. 8184 0%-WT�� April 6, 1999 To the Mayor and Members of the City Council Page 5 of 5 Subject: Compensation Report • Financial Planning/Retirement Seminars—The City should increase the training offered in this area. This includes raising awareness of the City's Deferred Compensation programs, and initiating debt counseling information using the credit union and a consumer credit counseling organization. • Child Care Referral—The City has implemented on-line Child Care Information and Referral. Unless otherwise directed, the Human Resources Department will proceed to develop a strategy to implement the Committees' recommendations and the benefit improvements outlined above and bring this information back to the Council with information on implementation costs. Bob Terrell City Manager ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS