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Home My WebLink About05/19/1998, C11 - MANAGEMENT COMPENSATION council ` •,9.9F1 j agcnaa RepoRt CITY OF SAN LUIS OBISPO FROM: Ann Slate,Personnel Directo &'.*** SUBJECT: MANAGEMENT COMPENSATION CAO RECOMMENDATION Adopt a resolution approving modifications to the Management Pay for Performance Plan that include adjusting management salary ranges and the performance rating system. DISCUSSION On January 20, 1998, the Council directed staff to provide additional information on the pay for performance system with recommendations for adjustments that would be more comparable to the five step plan, management salary comparison data and an intemal equity study of department head positions. The City Council reviewed this information in closed session on April 21, 1998 and endorsed the following recommendations: 1. The Management Pay for Performance Plan should be modified as follows: • Link the lowest available pay-for-performance percentage increase to the amount of the range movement(e.g. 31%). • Shorten management salary ranges to approximate 25% spreads from minimum to maximum. 2. Management salary ranges should be adjusted to more appropriately reflect internal equity and labor market considerations. (See Exhibit A.) It is important point out that although salary ranges would be changed by this action the actual salaries of management employees can only be modified by application of the management pay-for-performance system. Pay for Performance Plan Modifications The modifications to the Pay for Performance Plan are designed to enable the good performer to move through his/her salary range in a reasonable period of time. By linking the lowest available pay-for-performance percentage increase to the amount of the annual'range movement (e.g. 3% which the Council, in January, approved for this year and next year) the employee who `Meets expectations"will not lose ground in his/her range placement. In other words,when the range is adjusted by 3% and an employee receives a `meets expectations" performance rating under this system, they would receive a salary increase which would allow them to maintain their relative position in the range The table below shows the current system with the far right column showing the above recommendation. Council Agenda Report—Management Compensation Page 2 Table I: Overall overall Salary3nermu : . : `Reeomm thrfidn Score. PerfarmaaceRahag.. Available, 0 to 80 Unacceptable None None 81 to 160 Needs Improvement None None 61 to 185 2% 3% 186 to 210 Meets Expectations 2.5% 3.5°h 211 to 235 3% 236 to 260 3.5% 261 to 280 4% 4% 281 to 300 Exceeds Expectations 45% 4.5% 301 to 320 5°/u 5% 321 to 340 5.5% 5.5% 341 to 360 6% 6% 361 to 380 Outstanding 6.5% 6.5% 381 to 400 7% 7% It should be noted that 75% of the City employees with the exception of non-safety management and department heads are at the top of their range; 30%of non-safety management are at the top of their ranges. Adjusting the salary increases available matrix addresses this inequity. By shortening management salary ranges to 25% from minimum to maximum, it reflects ranges that are of the same length as the City's non-management salary ranges that have roughly 5% between the five steps. By combining the proposed rating structure/system with shortened range spreads, individuals will then be able to advance though their salary ranges in reasonable time fimlmes.. The current structure does not allow for timely movement through the ranges. Management Salary Range Adjustments In 1994, department head positions including the appointed officials were evaluated by a consultant using appropriate factors and measures. The Council directed staff in January of 1998 to update the 1994 internal equity study and develop recommendations for Department Head salary ranges based on internal equity and external market place data. Exhibit A shows the adjusted ranges. While specific recommendations about non-Department Head management ranges were not requested, the Council, in closed session, agreed with the staff recommendation to finther adjust the ranges above the current 3%by 2.25%this year and next year. FISCAL IMPACT The recommendations have no immediate fiscal impact due to the fact that no individual salaries are adjusted, simply the salary ranges. All management salary adjustments are based upon performance as part of the Management Pay for Performance Plan. Raising the salary increase , Council Agenda Report—Management Compensation Page 3 available in the pay for performance system by 1% at the lowest level,but leaving the rest of the system unchanged, results in an increase of less than of/z of I% in compensation. That amounts to less than$20,000 beyond what is currently projected. The bulk of that increase will be funded after July 1, 1998 when the non-department head managers receive their performance pay. Accelerating the management employees' ability to move through their ranges does not create significant fiscal impacts in the long term since the City has always intended employees to reach the top of their ranges within a reasonable period of time. ALTERNATIVES 1. Retain the present management pay for performance system. This is not consistent with previous Council direction. 2. Modify the Management Pay for Performance System but leave management salary ranges unchanged. Whereas this alterative would address the issue of timely movement through the ranges, it would not address the internal equity and labor market issues that the Council wanted examined as part of the January 1998 request. ATTACHMENTS Resolution with Exhibit A RESOLUTION NO. (1998 Series) A RESOLUTION OF THE CITY COUNCIL OF SAN LUIS OBISPO ADJUSTING SALARY RANGES FOR APPOINTED OFFICIALS, DEPARTMENT HEADS AND OTHER MANAGEMENT PERSONNEL AND SUPERSEDING PREVIOUS RESOLUTIONS IN CONFLICT WHEREAS, the City Council is committed to a comprehensive policy that strengthens the recruitment and retention of well qualified and effective appointed officials and management personnel; and WHEREAS, in 1996 the City Council established the Management Pay for Performance System;and WHEREAS, that system provides that the City Council annually may adjust the salary ranges;and WHEREAS, the Council is committed to a compensation plan which reflects the differences between duties,responsibilities and job requirements; and WHEREAS, the Council determines that merit and performance shall be the sole basis for Appointed Official and Management compensation; NOW, THEREFORE, BE rr RESOLVED, that the City Council of the City of San Luis Obispo hereby modifies the Management Pay for Performance System as follows: SECTION 1. The salary schedule for Appointed Officials, Department Heads and other Management Employees shall incorporate the salary ranges as shown in Exhibit"A". SECTION 2. The rating system in the Management Pay for Performance Plan shall be modified by Hnldng the lowest available salary increase to the annual salary range increase , e.g. 3%in 1998. SECTION 3. The Appointing Authority, or City Administrative Officer shall determine compensation within the designated range, after evaluating performance in accordance with the Management Pay for Performance System. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of 1998. ' Resolution No.. ATTEST: City Clerk Bonnie L: Mayor Allen Settle APPROVED AS TO FORM: 00J?.00— sea -- — - i EXHIBIT A APPOINTED OFFICIALS AND MANAGEMENT SALARY SCHEDULE Salary Group Classifications Salary Range I City Administrative Officer $7810-9763 II City Attorney $71348918 III Public Works Director $6458-8072 IV Assistant City Administrative Officer $6157-7696 Community Development Director Finance Director Fire Chief Police Chief Utilities Director V Parks and Recreation Director $5831-7289 Personnel Director VI City Engineer $5566-6957 VII City Clerk $5105-6381 VIII Assistant City Attorney $44745593 Development Review Manager Economic Development Manager Long Range Planning Manager Natural Resources Manager Public Works Manager Wastewater Division Manager Water Division Manager IX Accounting Manager $4286-5357 Chief Building Official Fire Marshall Information Systems Manager Revenue Manager Supervising Civil Engineer Appointed Officials and Management Salary Schedule - Page 2 X Assistant to the CAO $4011-5014 Parking Manager Principal Transportation Planner Recreation Manger II- Risk Manager Transit Manager Wastewater Treatment Plant Supervisor Water Treatment Plant Supervisor Utilities Engineer XI Administrative Analyst $3783-4729 Fire Protection Specialist GIS Manager Industrial Waste Coordinator Neighborhood Services Manager Personnel Analyst Public Safety Information Systems Coordinator Recreation Manager I Utilities Conservation Coordinator Wastewater Collection Supervisor Water Distribution Supervisor Water Supply Supervisor XII Accounting Supervisor $3491-4364 Arborist Building Maintenance Supervisor Communications Supervisor Customer Services Supervisor Golf Course Supervisor Parks Supervisor Police Records Supervisor Recreation Supervisor Streets Supervisor Supervising Mechanic Gam,n C-0